sky high

Income limits causing ‘mortgage lockout’ for First-Time Buyers

Sunday Times article ; results of Mortgage Brain survey.

A new survey of brokers highlights that the income rules will provide a ‘killer blow’ for First Time Buyers (FTB) and not the deposits as previously expected by many analysts. This survey was carried out by Mortgage Brain Ireland, the team behind the IrishMortgages app. Some 200 broker companies were surveyed throughout Ireland. Brokers recommend increasing the lending limits to 4.0 or 4.5 times income.

 

The Loan to Income limits (3.5 times joint income) will be the real “killer blow for First Time Buyers trying to get on the housing ladder” according to Michael Quinn, Managing Director of Mortgage Brain Ireland. Some ” 48% of brokers feel that this income rule will have a high impact on the FTB’s ability to get a mortgage while another 40% of brokers believe there is a medium impact” according to Quinn.

 

Michael Dowling, a leading Irish Mortgage broker and chairman of Mortgage Brain Ireland said: “These new rules will directly impact First Time Buyers’ ability to purchase a home. The rules will likely put home ownership out of the reach of most young FTB’s unless they are earning a substantial salary. For example he points out that a couple who are now trying to buy a house worth €300,000 will need a deposit of €38,000 (12.6%) on a mortgage of €262k and this will require a joint income of €75,000.”

 

The new income limits (3.5 times joint income) will mean that the majority of public sector workers, and those on medium to low incomes, will not be able to borrow enough to buy a home in the city. This ‘mortgage lockout means that only white-collar professionals on high salaries will be eligible to borrow enough to match the high house prices in Dublin, Cork and Galway.

 

The IrishMortgages App survey asked Brokers their opinions on how we could improve the situation. Some 51% of brokers would recommend an increase in income multiples to 4.0 times income, while a further 33% suggested increasing this to 4.5 times income according to Quinn. In the UK the income multiple is 4.7 for single applicants and 4.5 for joint applications.