Housebuyers seeking fixed-rate mortgages due to fears over interest rate hikes 

Just 11% of those surveyed were satisfied with the housing measures introduced by the Government in the recent budget.

The vast majority of hopeful Irish house buyers are now seeking fixed-rate mortgages as fears over both interest rate hikes and the cost of living crisis continue to spook the housing market.

Some 75% of prospective buyers will now seek such a mortgage, which generally trades a higher rate for security from interest rate shocks, while over half, 58%, of buyers are now looking for a mortgage term of longer than five years, according to the latest MyHome.ie property market survey.

There is little good news for the government in the study, conducted with 2,520 respondents in late October, with nearly 9 in 10 respondents saying they believe that the Government could be doing more to help the property sector.

Just 11% of those surveyed were satisfied with the housing measures introduced by the Government in the recent budget.

Joanne Geary, managing director with MyHome.ie, said the survey’s results suggest that the chief concerns of house buyers have now moved from energy costs to interest rates and ongoing issues with supply in the housing market.

Cost of living

The cost of living remains a significant concern, however, with 73% of respondents saying they would seek to run their home using renewable energy in order to offset high energy costs.

However, 74% of people who are seeking to either renovate a property or build one of their own said that their plans have been negatively affected by the ongoing cost of living crisis.

Interest rates have ballooned across the eurozone in a little over 15 months after 10 consecutive base rate hikes by the European Central Bank in a frenzied attempt to quell rampant inflation.

Those rate increases have seen the ECB’s base rate jump from 0% to 4.5% after seven years of inactivity, a massive increase which has heavily impacted holders of legacy tracker mortgages in particular, with homeowners on variable rates also impacted as Irish banks moved to adjust their own rates in tandem with the rest of Europe.

Two-thirds of those consulted for the survey said they are worried that the various rate hikes would now affect their ability to buy, up from 56% who answered the same way during the last survey, conducted at the start of March.

The survey suggests however that, even more than interest rate issues, housing supply is currently a major problem, for while 6 in 10 respondents to the study say they have financing secured to purchase a property, only a quarter of buyers believe there are enough properties on the market to enable them to achieve their goal.

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Overall sentiment in the market remains very poor, with only 14% of those asked saying they think the next year will be a good time to purchase property, and three quarters of them expressing themselves worried about the state of the property market generally.

“In short, there are too many prospective buyers battling over too few properties which are steadily costing more to finance. It’s not a reality that lends itself to positive sentiment,” Ms Geary said.

She added more positively that the number of people seeking to use renewable energy to power their home is encouraging, saying that the State should look to build on the trend.