Home loan options plunge

THE choice of mortgage products in the market has plunged to a record low, with analysts saying most foreign lenders are no longer interested in lending.

Director of the Irish Mortgage Corporation Frank Conway said following the withdrawal of Halifax, consumers now have less choice.

He said Permanent TSB and National Irish Bank, which were “former champions of competitive pricing”, now have the most expensive residential mortgages in the Irish market.

“The bad news for Irish consumers is there is less and less choice when it comes to mortgages, with just a handful of lenders now fully active in the market,” he said.

NCB analyst Ciaran Callaghan said domestic players are controlling the mortgage market.

“While the demand for new mortgage lending in Ireland remains weak, the domestic players are the only competitors in the market.

“Most of the foreign banks have either priced themselves out of the market or else have withdrawn retail products.

“Therefore, both AIB and BoI (Bank of Ireland) are likely to have more than doubled their market by writing almost 80% of all new loans between them in 2009, with the EBS Building Society making up the remainder,” he added.

The Professional Insurance Brokers Association (PIBA), meanwhile, said it has now become cheaper to buy a house rather than rent one.

With figures showing that rents across the country rose by 1% in January, Rachel Doyle, director of PIBA mortgage services, said that while it remains to be seen if the latest rental figures become a trend, “the reality is that rental and house prices are now very closely aligned”.

However, she warned that potential buyers do need to factor in interest rate increases.

“Another consideration is the fact that there are very attractive long-term fixed rates on offer at the moment that will almost certainly increase,” she said.

The most recent Permanent TSB/ESRI house price survey found that prices nationally have fallen by 31.5% since the price peak in February 2007.

“While there will be regional variations, taking the example of the average house price in Dublin of €278,767, repayments over a 30 year period at a 2.65% variable rate would be €1,011 per month based on a 90% Loan-To-Value ratio. By comparison the average monthly rent in Dublin is approximately €953.”

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