Mortgage reduction for boom-time house buyers

HOMEOWNERS who bought during the boom will see their mortgage repayments come down as interest relief increases.

This comes in the same week the ECB is expected to announced a cut in interest rates. The rate of mortgage interest relief will increase to 30% for first-time buyers who bought between 2004 and 2008.

Michael Noonan said the Government was committed to helping address the particular problems faced by those that bought homes at the height of the property boom.

The Government also said 2012 first-time buyers will get mortgage interest relief at 25% and non-first time buyers will get relief at 15%.

Tom Parlon, director of the Construction Industry Federation, said the constraints on mortgage finance and fear among potential buyers has depressed transactions well below normal levels.

“This announcement provides a very significant financial incentive for those who wish to buy in 2012. Any measure that helps stabilise the residential property market is extremely significant from the perspective of the overall macro economy,” he said.

Rachel Doyle, director at the Professional Insurance Brokers Association, said while the moves yesterday were positive, the issue of bank lending must be addressed.

“The continuing freeze on mortgage lending by the banks is a major impediment preventing the beginning of the journey back towards normality in the market.

“We welcome comments by Mr Noonan that lenders must lend but we would like to know what type of residential lending targets will be put in place to ensure this happens,” she said.

Mr Doyle also welcomed the Government move to stick to its Programme for Government promise to increase the rate of mortgage interest relief to 30% for first-time buyers who took out mortgages from 2004 to 2008. She said technically that would be correct but it would really require further clarification from Government as to its intentions.

Property consultants Knight Frank Ireland said the interest relief increase was good news for homeowners and an incentive for first-time buyers who now have a greater opportunity to buy until the end of 2012.

“This is also a timely boost for the suffering construction industry,” they said.

The Department of Finance confirmed a mortgage taken out in 2004 will qualify for mortgage interest relief until 2017 at the 30% rate. However, after seven years the ceiling amount allowable for mortgage interest relief would be reduced.

For example, married first-time buyers will get relief at 30% of €20,000 in the first seven years, reducing to 30% of €6,000 after that until 2017.