Mortgage-rate increases see first-time buyers shelling out thousands extra
Data from the Banking and Payments Federation found first-time buyers are now paying around €110 more than in early 2020.
New mortgage applicants are shelling out over €1,300 more than those who secured loans pre-pandemic.
And that figure does not take into account further rises that have resulted from European Central Bank interest rate hikes.
New data from the Banking and Payments Federation (BPFI) scrutinises mortgage data collected from the start of 2020 to the first half of this year, before ECB rate hikes were imposed.
It found that first-time buyers (FTBs) are now paying out a median price of €1,020 per month, around €110 more than in early 2020. Mover-purchasers experienced an increase of €150 to €1,361.
That means that FTBs will, over the lifetime of a 35-year mortgage, shell out more than €46,000 more than their peers who signed up just two years earlier.
“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 Brian Hayes, chief executive of the BPFI.
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 that 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.
“There’s an assumption that, just like back in the Celtic Tiger days, everyone wants to borrow the maximum amount they can. This report shows that not to be the case; borrowers these days are far more prudent,” said Trevor Grant, chairperson of the Association of Irish Mortgage Advisors.
Overall, the mortgage market continued to grow strongly 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.
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 looking to reprice to avoid as much of the rate increases as possible," he said.
The data comes as the market anticipates further EBC rate hikes, though reports indicate that next month, the increase will be a half-point, not 0.75 as previously anticipated.
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