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Are first-time buyers being ruled out of the market?

The property market in Dublin and other sought-after areas has slowed significantly because first-time buyers (FTBs) can’t get mortgages to buy properties there under the new Central Bank rules.

Typical working couples are getting approved for €100,000 less in mortgage borrowings under those rules. This is forcing FTBs to either rent or to buy further afield. It is also believed the recently discussed first-time buyer grant, if re-introduced, will be of little, if any, help to house hunters. The State grant, which would likely be between €3,000 and €5,000, was discussed at a Labour Party parliamentary meeting earlier this month.

A couple earning €75,000 between them, which is around the average wage each, could have borrowed between €340,000 and €360,000 before the rules kicked in on February 9 – as long as they could prove they were saving or paying rent equivalent to the mortgage repayments on that mortgage for at least six months. That couple could today borrow €262,000 – that’s a massive drop.”

FTBs on average salaries who are looking to buy property in or near Dublin have been hammered by the new rules.

The average first-time buyer will find it harder to get a deposit together so they can buy in Dublin, even Lucan or Celbridge may be beyond their reach. So they have been driven to look to commuter belt areas like Enfield, Kilcock, Portlaoise and Drogheda.

 

Dubliners hit hardest with new lending rules.

The new Central Bank rules on mortgage lending, while not as harsh as expected, still came as a huge blow to many house hunters. Most of those looking to buy a home today must now get together a larger deposit than had previously been the case.

We are in a state of flux at the moment when it comes to analysing the real impact of the new rules and ultimately it is still much too early to tell.

Many people had mortgage approval from banks before the rules kicked in and they still have time to proceed with these mortgage agreements to buy a property. Hence, much of the activity we are seeing on the market now is from these people.

What has become glaringly apparent is that where you want to live in the country will be a huge factor in determining the impact of the new rules. Ultimately, first-time buyers in Dublin, particularly those on low or middle incomes, have been crucified

Under the new rules, first-time buyers still only need a 10pc deposit – as long as the house they are buying is worth no more than €220,000. Otherwise, they must have a higher deposit for the portion of the home that is worth more than €220,000.

The average asking price nationwide is now €201,000, according to the latest house price report from Daft.ie. As this is below the €220,000 limit, many first-time buyers won’t be put out by the new rules. However, this is just a national average – the county averages vary hugely.

The most expensive areas in Ireland to buy three-bedroom properties are unsurprisingly all in Dublin. The average asking prices in Dublin, as well as Kildare and Wicklow, are well above the national average. However, average asking prices in Cork, Galway and Limerick are below the national average.

So what can house hunters do to ensure they can buy within the boundaries of the new rules?

First, if you have been saving for a deposit, continue to save. While you may have to alter the value of the properties you have been looking at, you don’t know what the future will bring and what will happen to house prices.

Second, don’t rush! All this uncertainty makes people on edge and often people can make rash decisions when they are feeling like that. Buying a house is a huge and long-term purchase. So the same deciding factors apply. Is it an area that you want to live in? Can you imagine yourself there long-term? And so on.

Third, affordability is key. It’s not just up to the banks or the regulatory bodies to ascertain whether or not you can realistically afford a property. Be prudent. You’re the one who will have to meet the monthly repayments which will directly impact the lifestyle you can have.

State-funded grants for First-time Buyers under Labour.

First-time buyers will receive state-funded grants to help them meet strict Central Bank deposit limits, under plans being considered by Environment Minister Alan Kelly.

This news comes as senior Government sources last night said its announcement on a new mortgage arrears plan is now not expected until after the Spring Statement on the economy on April 28.

This is because of continued disagreement between the Coalition over Labour demands to reduce the bankruptcy term from three years to one year.

The new Labour proposals, which are being driven by a number of party backbenchers, are being targeted at couples living in urban areas who cannot meet the deposit rules in order to obtain a mortgage.

The measures will mean the minister directs local authorities to provide cash grants to applicants struggling to get onto the property market in cities such as Dublin, Cork, Limerick and Galway. A similar scheme, which previously saw first-time buyers being given grants of up to £IR3,000, was scrapped in 2002.

Irish Life Press Release 24th March 2015

Claims data released for 2014 figures by Irish Life.

Over €7.8 million paid out in Kildare in respect of 114 death and Specified Illness Cover claims in 2014.

Cancer was the biggest cause of claims in Kildare with €4.9 million paid out. The illness accounted for 36 of the 68 Life Insurance claims in the county.

The average age of death in Kildare for Life Insurance claims was 62 years and 50 years for Specified Illness claimants.

Commenting on the data Gerry Hassett, Managing Director, Irish Life’s Retail business said ‘The scale of the claims paid in 2014 show once again it is crucially important for people- parents in particular- to protect the financial wellbeing of themselves and their families. Our research has found that over 90% of parents say that their family would have no financial worries, if anything actually happened to them.’

He addded ‘In 2014 we paid out on average €4million a week helping to ease the financial burden at a very difficult time for many families across Ireland.’

 

 

Irish house buyers being charged much higher interest rates than others in europe – Central Bank

Irish house buyers are being charged way above the euro zone average in interest on their mortgages, according to the latest Central Bank data.

The cost of a typical new mortgage here increased in February, according to new figures from the Central Bank.

The average interest rate charged for a new variable rate mortgage was 4.2pc in Ireland at the end of February, according to the Central Bank.

The latest figures will add to the controversy over the high cost of Irish loans for customers with Standard Variable Rate mortgages.

When the interest rate on restructured home loans is included the average cost of a new or restructured mortgage falls to 3.38pc. The euro area average was 2.09pc

The average interest paid by all mortgage borrowers however is 2.72pc, a figure that reflects the nearly one-in-two home loans with a tracker rate that has an explicit link to the official ECB rate.

 

Irish Life 2014 Life Cover Claims

Irish Life have published figures for claims made for Life Insurance in 2014. They paid out on average over €4 million per week to families across Ireland. Claims were made for both Life and Serious Illness Cover.

 

Irish Life 2014  Click on the link for a county by county run through.

  • Dublin ranked the highest overall for claims last year; 608 Life Insurance and 230 Serious Illness claims made .
  • Kildare had 68 Life cover and 46 Serious Illness claims.
  • Meath was slightly higher with 73 Life cover and 51 Serious Illness claims made .

However, the counties with the youngest average age of Serious Illness claims made to Irish Life were Roscommon and Mayo; 39years and 47 years respectively.

These figures stress the importance of having adequate Protection in place for yourself and your loved ones. To review your Life Cover plan get in touch with us in our Maynooth office on 01-5052718.

Help needed for those on sky-high variable mortgage rates.

TAOISEACH Enda Kenny has no plans to force banks to reduce sky-high variable mortgage rates, beyond asking them to show their customers “a degree of understanding”.

Mr Kenny appeared to be laying the groundwork for a U-turn on the Government stance that it cannot intervene in the day-to-day workings of the banks yesterday, by saying he would put pressure on them to cut variable rate holders some slack and pass on lower European Central Bank rates.

“I expect the banks to do better than they have been doing in respect of variable mortgage interest rates,” he said.

However, his spokesperson said there was “nothing further to add” when questioned last night as to what Mr Kenny would do if banks didn’t reduce home-loan payments.

More than 300,000 families on variable rates are paying interest rates that are four times higher than those on tracker rates.

Showing up Mr Kenny’s weak position, Finance Minister Michael Noonan insisted he has no actual legal powers to allow him to act.

However, Mr Noonan is expected to meet with the Central Bank governor today to discuss the issue.

“I will again speak to the governor of the Central Bank and ask the bank to see what influence they can bring to bear, to bring the variable mortgage rates closer to the cost of funds,” said Mr Noonan.

Variable rates here are more than double those charged elsewhere in the eurozone.

The gap in what is being charged means that a family with 20 years left to pay on a €200,000 mortgage, on a variable rate, is paying €4,000 more a year than a family with a tracker owing the same amount.

And the rates being charged to new mortgage customers are €600-a-year less than to existing variable rate mortgage payers.

 

 

 

 

 

Impact of Central Bank lending rules on the housing market.

The Central Bank has admitted that its controversial 80/20 mortgage deposit rules will have an “unavoidable” negative impact on the housing market.

The Bank insisted that it sought to minimise any unintended consequences but that “some spillover effects to other areas of the housing market are unavoidable”.

However, Prof Kieran McQuinn of the Economic Research and Social Institute (ESRI) warns of far-reaching consequences of the tough deposit regime.

He warns the measures may result in lower house prices, fewer houses being built and lower levels of mortgage credit being extended.

“Last year we built 11,000 units, but we need 25,000 units per annum to meet demand,” he writes.

In a statement to the Sunday Independent, the Central Bank insisted the new mortgage-lending rules were introduced to increase the resilience of banking and household sectors to property crashes and “dampen the pro-cyclical dynamics between property lending and housing prices”.

The Central Bank said it controls only one part of the overall range of policies needed to ensure a well-functioning housing market.

Meanwhile, tens of thousands of young adults will be excluded from buying their own home and will remain trapped paying sky-high rents because the Central Bank’s tough new deposit rules are an impossible hill to climb.

The representative professional body for licensed auctioneers, valuers and estate agents says that the rules must be softened so that cash spent by tenants on rents, which rose by €1,200 in Dublin in 2014, will be acknowledged as proof that borrowers have an ability to save.

IPAV President Pat Davitt told the Sunday Independent that there is a generation of first-time buyers who have been forced out of the market by the Central Bank rules, especially those who do not have the luxury of family being able to help with a deposit.

“This will be particularly acute in Dublin and other urban areas where prices are higher. For a house costing €300,000, a deposit of €38,000 is needed. At €350,000 the deposit required is €48,000. That is a hell of a hill to climb.

“This age group is in a particularly difficult situation because by the time they do manage to save, in a market where rents are rising, they could find themselves dealing with higher interest rates in a growing economy, unless policymakers bite the bullet and tackle that issue,” he said.

The mass sell-off at rock-bottom prices of whole blocks of apartments in the capital to investment funds is also contributing to the crisis, says IPAV, which has 800 members across Ireland.

“The issue is a severe lack of supply of suitable properties and a catastrophic failure of planning – planning for a population we knew was growing.

The new mortgage lending limits have been blamed for property prices falling in February for the second consecutive month.

Prices fell by 0.4pc last month (0.7pc in Dublin) after falling by 1.4pc in January. Though the figures come with the caveat that the first two months of the year are generally flat in the property market and many experts say that vendors overpriced property – particularly in the last quarter of 2014 – hoping to cash in on the rush to buy before the end of capital gains tax exemptions at year end.

However, the CSO figures do show that on an annual basis, residential property prices are still up by 14.9pc.

The average property price in Dublin now stands at €274,200, a rise of €48,000 in a year.

Outside the capital prices are up €12,600 to €165,000 in the 12-month period. The biggest issue is still a shortage of supply of new properties for sale

Data complied by The Sunday Independent.

New Ireland paid out over €480m to customers in the past 5years.

New Ireland have paid out over €480 million to its customers in the past 5 years. Claims were made in the period from January 2010 to Decemebr 2014.

In a statement from New Ireland they pride themselves on this record;

‘ We are extremely proud of our claims history in the Irish Market. We really care about customer claims as they demonstrate our commitment to meeting our customers’ financial protection needs when they need it most’.

Who is making claims and why?

A breakdown of 2014 statistics highlights the largest emerging demographics and reasons for those making a claim.

  • Main Causes of Claims: approximately 76% of (individual) serious illness claims and 66% of (individual) life cover claims were for cancer and heart related illnesses.
  • Early Claims: 46% of (individual) life cover claims arose from policies less than 10 years old.
  • Young Claimants:27yrs was the age of the youngest serious illness claimant, 26yrs* was the age of the youngest life cover claimant, and 24yrs was the age of the youngest income protection claimant.
  • Male versus Female: 77% of income protection claimants were female.

* This statistic excludes any children’s deaths.
The figures above are based on New Ireland Assurance’s claims experience in 2014.

Royal London Special Offer Discount Extended

We have just received great news from Royal London! They have extended their special offer of 5% off Term Assurance and 10% off Mortgage Protection Cover, until 30th April 2015.

The 5% off Term Assurance also includes Indexation and Pension Term Assurance.

We price match all insurance quotes for our clients, so you know you’re getting an extra 5% or 10% discount off the best quotes on the market.

So, if your premiums have skyrocketed and you’re shopping around for a better deal get in touch on 015052718 or pop into our ofice in Maynooth,Co.Kildare. Make the switch!