Mortgage repayments up €100 a month due to rising property prices, according to new report

Ireland's mortgage market grew strongly in the first half of 2022, with drawdowns up 17% to 21,895, the most since 2009

The median monthly mortgage repayment, excluding self-builds, rose by more than €110 to €1,020 for first-time buyers. Stock picture

Mortgage repayments increased by over €100 compared to pre-pandemic levels due to rising property prices and larger loans, according to a new report.

This increase does not take into account further rises for mortgage holders due to the ECB interest rate hikes, as the latest report from the Banking and Payments Federation Ireland (BPFI) concerns data between the first half of 2020 and the first half of 2022, before the rate increases were introduced.

“In the face of rising residential property prices and wider increases in the cost of living in the first half of 2022 and higher ECB interest rates in the second half, there is understandably an intense focus on mortgage repayments at present,” said BPFI chief executive Brian Hayes. 

The median monthly mortgage repayment, excluding self-builds, rose by more than €110 to €1,020 for first-time buyers (FTBs), while mover purchasers experienced an increase of €150 to €1,361 over this time period.

The Mortgage Market Profile Report also showed one in five FTBs and two in five mover purchasers borrow less than they could under Central Bank mortgage rules, as borrowers are looking to reduce payments. 

Banking and Payments Federation Ireland CEO Brian Hayes said there was 'understandably' an intense focus on mortgage repayments at present. File picture: BPFI

“There’s an assumption that, just like back in the Celtic Tiger days, everyone wants to borrow the maximum amount they can,” said Association of Irish Mortgage Advisors chairperson, Trevor Grant. "This report shows that not to be the case — borrowers these days are far more prudent."  

Overall, the mortgage market continued to grow in in the first half of this year, with drawdown volumes up by 17% year on year to 21,895, the most since 2009.

FTBs led the way with 11,178 drawdowns, the highest half year volumes since 2007.

In Cork, the median monthly mortgage repayment for FTBs on new properties, excluding self-builds, fell by 1% year-on-year to €1,220, the only region to experience a decline. However, the median FTB repayment on existing properties rose by 11% to €915. 

FTBs buying or building new properties accounted for only 13% of home mortgages in Dublin in the first half of the year, the lowest share of any region. 

At €375,000 and €575,000, Dublin had the highest FTB existing and mover purchase property values in the country.

Mr Grant expects switching activity to rise in the coming months which will boost the mortgage market next year.

“The overall mortgage market will continue to perform strongly into 2023, largely driven by switching, which, as mortgage rates continue to rise, is likely to balloon in the coming months, with existing borrowers look to reprice to avoid as much of the rate increases as possible," Mr Grant said.

“We anticipate further ECB rate hikes in the coming months so for mortgage holders looking to negate the financial impact of this, the window to switch is limited.”

The ECB is expected to slowdown interest-rate hiking, with only a half point increase next month, according to Bloomberg.