First-time buyers have lower mortgage default rate

The default rate among first-time buyers is less than mortgage holders on their second or subsequent homes, which has implications for the Central Bank’s 80% proposed loan-to-value rule.

In research carried out by the Central Bank, it found that the default rate among first-time buyers was 10.3% compared with 14.9% for mortgage holders who have moved on to at least their second home.

Final submissions were made to the Central Bank last Monday about the proposed new mortgage rules that would require banks to cap mortgages at an 80% loan-to-value for 85% of lending in any year and loan-to-income at 3.5 times’ salary.