EBS to lend €400m this year

The EBS has said it intends to lend at least €400m to mortgage customers this year on the back of new data indicating that housing affordability is improving and returning to mid-1990s levels.

The latest affordability index — from EBS and economic consultancy, DKM — shows that 2012 ended with house affordability in this country at its best level since before the birth of the Celtic Tiger.

According to the index, 11.7% of an average first-time buyer working couple’s net disposable income was required to fund a mortgage last December.

Although this figure increased to just over 14%, with the cessation of mortgage interest relief last month, it is still significantly lower than the 26.4% levels recorded at the peak of the housing boom seven years ago.

Conal Clerkin, head of mortgages at EBS, said yesterday’s figures represent further evidence of stabilisation in the housing market, which “will encourage those wishing to purchase homes to seek mortgage approval”.

The new EBS/DKM index highlighted the removal of mortgage interest relief and of the weekly PRSI-free allowance, and the introduction of the local property tax (to which first-time buyers are exempt until the end of 2016 as well as new and previously unused properties purchased from builders/ developers) as the three key developments likely to impact on housing affordability this year.

However, despite a slight knock-on effect seen in January, an improvement in affordability — as seen throughout 2012 — is expected to be evident again in February’s figures.

DKM’s analysis added there are “tentative signs” property prices are at, or close to, the bottom, with transaction and mortgage trends “encouraging”.

“With a number of financial institutions proactive in the mortgage market and eager to provide mortgage finance based on the required lending criteria, this is good news for first-time buyers and the supply of mortgage finance,” it added.