Making Cents: Don't delay if planning to buy a new home
The average three-bedroomed, semi-detached house was reaching sale agreed status after just six weeks on the market at the end of 2020. This was down from a 10-week average in June.
If your plans for 2021 include buying a new home, the advice from a Cork-based mortgage expert is to get organised and don't delay.
Joey Sheahan, head of credit at MyMortgages.ie, says 2020 was dominated by growth in the first-time buyer (FTB) and switcher market and there are signs this could continue to be the case the year.
Despite all the uncertainty and upheaval of the pandemic, Ireland's property market has remained strong. A record number of mortgage approvals and a lack of supply have driven the increases, according to the quarter-four Real Estate Alliance (REA) House Price Index.
The average three-bedroomed, semi-detached house was reaching sale agreed status after just six weeks on the market at the end of 2020. This was down from a 10-week average in June.
“[2020 was] marked with ups and downs of course," Mr Sheahan says. "There were periods in which very little could happen, but at other times, we were busier than we’ve ever been. And I know our experience in this regard mirrors that of other brokers throughout the country.
"We will be leaving 2020 on a strong footing in terms of the volume of mortgage applications we are working on."
The Central Bank recently confirmed that there would be no loosening in the mortgage lending limits for the foreseeable future and, as a result, MyMortgages.ie are forecasting that lending exemptions will also take centre stage from early in the year, with FTBs in particular grappling for some of the much sought-after exceptions to the rules.
"This will make exemptions even more precious," Mr Sheehan said of the Central Bank confirmation. "In the same week, Ulster Bank announced that they were changing their borrowing practices and applicants availing of exemptions would no longer have to pay higher rates, but would have access to the raft of lower rates Ulster Bank has introduced.”
There are several banks in the Irish market offering exemptions, which means a borrower can borrow more than 3.5 times their income or a second-time buyer can borrow up to 90%.
Mr Sheahan’s advice is to get started on their preparation work for your mortgage application at the earliest opportunity. While the recently reintroduced restrictions limit in-person meetings, brokers are offering virtual appointments and phone consultations and much of the paperwork you need can be gathered from the comfort of your home.
Switching is a topic I have raised repeatedly in this column, simply because there are significant savings to be made in the long-term. Mr Sheahan urges mortgage-holders to consider a switch in 2021.
“The market is heating up in terms of competition, so, for mortgage holders, the message is clear and simple — switching saves mortgage holders thousands and if you’re on the same rate for more than three years then you need to reassess your options,” he said.
“For example, we are currently in the process of switching a new client, who had not reviewed their mortgage in three years, from an interest rate of 4.2% to 1.95%.
“They are going to save €105,000 interest over the term of their mortgage, based on a €300,000 mortgage at 60% with 25 years remaining.”
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