The Government is being urged to bring in a scheme to help first-time buyers save for a deposit for a new home.
Mortgage brokers claim that the Central Bank’s new rules brought in this year on mortgage lending are so onerous that it takes too long for potential home buyers to save for deposits.
The savings scheme would be similar to the SSIA incentives introduced by former finance minister Charlie McCreevy over 12 years ago.
Under the Special Savings Incentive Accounts the Government provided a €1 bonus for every €4 savers committed to put aside on a regular basis.
The SSIA scheme was nonetheless controversial because it used public funds and eventually released a large amount of money into the economy when they matured, at a time consumer spending was already running at a high level.
But a survey of brokers say that a tailored SSIA incentive could help first-time buyers struggling to save for deposits.
Michael Dowling, chairman of Mortgage Brain Ireland, which carried out the survey, said the scheme could provide “a massive help” to first-time buyers caught in what the firm describes as “rent hell”.
There is “the potential to save them over €12,000. Not only would it save €8,640 needlessly wasted on rent, it would also save €3,520 on deposit costs,” he said.
Mortgage Brain calculates that it takes 44 months for a couple putting aside €400 a month to save for an average first-time buyer’s deposit of €17,600.
Its proposes that under its Government-led savings plan a couple saving €400 a month would get a €100 monthly bonus.
That would lead to the couple having to save for only 32 months to secure the deposit.
The brokers say that first-time buyers would also benefit by getting on the property ladder earlier and therefore save paying out on renting properties at a time when there is no sign that rental inflation will ease.
Michael Quinn, CEO of Mortgage Brain Ireland said: “With the cost of rent rising sharply, people are finding it increasingly difficult to save for a deposit whilst paying these high rents.
“This is putting the prospect of home ownership into the hands of privileged high-paid professionals.
“The Government needs to help the average hard-working couple fulfil their home-ownership dreams,” Mr Quinn said.
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