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Interest rates here almost twice EU average.

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The average interest rate on new mortgages here remains almost twice what it is in the Eurozone. The rate stood at 3.38pc in November. Although this has fallen over the past 12 months, it is much higher than the euro area rate of 1.72pc, according to data from the Central Bank.

New variable rate mortgages, which had an average interest rate of 3.38pc, accounted for two-thirds of all new agreements in Ireland over the past year. A bill to allow the Central Bank to force rates lower continues to be examined in an Oireachtas Committee

First-time buyers rush for rebate

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More than 800 applications have been made for the new Help-to-Buy scheme for first-time buyers (FTBs).

Interest has remained high since it opened earlier this month, with some 828 FTBs filling out online application forms over the week in the expectation of securing a lucrative tax rebate.

The scheme allows for a refund of income tax and DIRT, but not USC or PRSI, paid over the previous four years which can be put forward towards a deposit to buy a new house or apartment.

Some 5pc of the purchase price to a maximum of €20,000 can be claimed. A price ceiling of €600,000 applies to homes purchased between July 19 and December 31 last. This falls to €500,000 for properties bought this year.

All you need to know about the rule change for first-time buyers

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The Central Bank has made a dramatic change to its mortgage lending rules for first-time buyers.

However, there are also fears that the loosening of the lending limits will lead to even higher property price rises.

First-time buyers will now be able to borrow with a deposit of 10pc, if they meet other lending criteria.

Up to now, new borrowers could have been approved for a mortgage with a deposit of 10pc for borrowings up to €220,000 and a 20pc deposit for all amounts over that. The changes will take effect from 1st January 2017.

At the moment, a first-time buyer purchasing a home for €300,000 needs a deposit of €38,000.

From next year, the new buyer should qualify for mortgage approval with a deposit of €30,000.

This will give the buyer an extra €8,000.

And if the buyer qualifies for the Government’s Help-to-Buy scheme for new homes, they will get a tax rebate of €15,000.

This means they will be able to buy with an effective deposit of 95pc of the property’s value.

Help to Buy- Budget 2017

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A new scheme is being introduced to provide a rebate of income tax paid (but not USC or PRSI) over the previous 4 years for first time buyers buying a newly built principal private residence or equivalent self build, on or after 19th July 2016. The rebate will be 5% of the purchase price of the property up to €400,000, i.e. a maximum rebate of €20,000 per property (not per joint buyer) assuming the buyer(s) have paid at least €20,000 income tax over the previous four year period.

The rebate only applies where the mortgage is at least 80% of the home value.

Those who will NOT qualify for the rebate include:

• First time buyers who signed a contract to buy a new home before 19th July 2016;

• First time buyers with an LTV less than 80%;

• First time buyers buying a home valued at more than €600,000;

• Non first time buyers; and a joint purchase between a first time buyer and non first time buyer; both purchasers must be first time buyers

The rebate scheme is scheduled to run to end of 2019.

 

 

Surge in approvals for home loans – but few are likely to buy

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There has been a surge in the number of people getting approval for a mortgage, but many of these people being approved for a home loan are competing hard with each other for the few houses that are available and are unlikely to end up drawing down the mortgage, experts have said.

In August, close to 3,000 people received mortgage approval to buy a home – a rise of 37pc on the same month last year. However, the number of homes listed for sale on MyHome.ie was close to a historic low – at 23,500 in June this year. Put simply, the lack of housing construction means that greater numbers of potential buyers are focusing on a smaller pool of homes listed for sale.

Central Bank told to change lending rules

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Fianna Fail and Labour call for deposit cuts for first-time buyers struggling to get on ladder.

First-time buyers are being frozen out of the housing market due to high rents coupled with the massive mortgage down payments they are forced to save due to the Central Bank rules.

Young families hoping to trade-up are also being crippled by the lending conditions which mean they have to save a huge 20pc deposit on any home they hope to buy.

Fianna Fail is calling for the rate for first-time buyers to be slashed by a third if the house-buyer has a proven track record of paying rent for three years.

The party’s submission, which was prepared by Fianna Fail finance spokesman Michael McGrath, also calls for new laws which will force banks to take out insurance against losses arising from borrowers defaulting, or entering into a mortgage arrears resolution process.

The cost would be shared between the borrower and lender – the bank would add an interest rate to the loan to cover the insurance.

Campaign wants 20,000 to switch mortgages

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A massive campaign to get 20,000 variable-rate mortgage holders to switch to another provider is to be launched.

The One Big Switch group aims to do a deal with a bank for lower mortgage rates in return for delivering thousands of switchers to it.

The group has already negotiated deals with electricity providers and health insurers for those who sign up with it. It has a database of some 80,000 registered consumers.

There are around 370,000 people on variable rates in this country, with customers paying some of the highest interest rates in the eurozone.

It is estimated that switching to the best-value mortgage could see a family with a €250,000 home-loan saving around €1,500 a year.

“If 20,000 people are prepared to switch together it will unlock the buying power for a group discount,” Lachlan Harris of the One Big Switch campaign said.

Once the group has thousands of mortgage holders who register for the mortgage campaign, One Big Switch will then negotiate with the banks for an exclusive group discount.

Property prices still rising despite Central Bank’s lending curbs

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Property prices continue to rise at more than 1pc per month, despite the lending measures introduced by the Central Bank to cool the market.

Figures released by the Central Statistics Office (CSO) show national price hikes of 8.9pc year on year – and 1.3pc in September.

Meanwhile, in Dublin, residential prices rose by almost 1pc (0.9pc) – up 6.5pc on September last year.

The latest month’s data is comparable to the 1pc-plus increases during the boom years.

More worryingly, Dublin house prices (not including apartments), which the Central Bank measures were designed to cool, rose 1.1pc in September.

However, national residential prices are still now 34.6pc lower than at their peak level in 2007, while Dublin prices remain 33.7pc lower.

It has been noted that the increases, particularly in Dublin, were a sign that bank lending restrictions in the absence of supply increases were not working.

Noonan refuses to demand mortgage rate cuts by banks

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Finance Minister Michael Noonan has said he believes the country’s main banks will slash their high variable rates if their customer bases come under “threat” from new competitors.

Senior bank executives told Mr Noonan last week that they had put in place a series of “options” for borrowers, which would allow them to reduce their monthly payments.

These include fixed rates that are lower than variable rates.

Mr Noonan has urged mortgage holders to contact their banks and switch provider “if the offer is not satisfactory”.

But he is understood to have refused to request banks to slash their rates.

The minister is instead banking on the prospect of them doing so voluntarily as a result of increased competition.

“Competition is the best long-term way of reducing interest rates paid by Irish borrowers and ensuring that Irish banks offer a sustainable product range,” Mr Noonan said in response to a parliamentary question by Mayo Fine Gael deputy Michelle Mulherin.

How you can avoid lender rip-offs

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The chances of getting a bad deal, or even being ripped off, are huge for both new buyers and those switching mortgage providers.

Here are some of the issues to consider, whether it is your first mortgage or you are opting for a new lender by moving your mortgage.

Be wary of cash deals.

Some banks are offering cash-back deals for new buyers and switchers.

This “cash-in-the-hand” offer is proving very attractive. It can represent up to €2,000 on every €100,000 borrowed.

But you will get lower mortgage rates from the likes of AIB, EBS and HAVEN. This means that typically after just eight years, you would be better off at one of these.

Fixed or variable

Many banks have refused to reduce their variable rates, despite demands from Finance Minister Michael Noonan. They have instead offered attractive fixed rates. But be aware that you are locked in with a fixed rate, for the period of the deal.

Some mortgage experts think variable rates may fall again.

Banks’ history of care

Before opting for a particular bank, ask yourself how good is that lender’s customer care.

Cost is not the only consideration. Standards of service are also important. Has the bank a history of overcharging, and how does it deal with those in mortgage difficulty?

Mortgage protection

Lenders will insist that you take out mortgage protection insurance, a type of life insurance policy that pays off your mortgage if you die before the end of the term.

Your lender will often offer to sell you a policy, but you don’t have to buy it from them and, indeed, it can be much cheaper to buy elsewhere. Talk to a mortgage broker who may be able to offer more choice.

Term of mortgage

The longer the term of your mortgage, the cheaper the monthly repayments will be. However, stretching out the term means you end up paying more in interest over the life of the loan.

Consider moving your current account

Both AIB and KBC offer interest rate discounts to new buyers and switchers prepared to pay for their mortgage through the banks’ current accounts. This could make these lenders worth considering.

How are existing mortgage holders being treated?

When taking out a mortgage with a bank, make sure that lender is passing on any rate reductions to existing customers.