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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.

Savings overhaul for first time buyers.

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The Government wants to overhaul a tax relief scheme for first-time buyers which has been labelled a “flop” by Fianna Fáil.

First-time buyers can apply for a refund on the Deposit Interest Retention Tax (DIRT) levied on savings to build up a deposit to buy a home. The scheme was due to run until the end of 2017, but its take-up has been poor.

Figures released in July showed that fewer than 50 refunds were issued since the scheme was introduced.

Finance officials are examining ways to make the scheme more attractive, as concern grows about a lack of initiatives for first-time buyers.

“We need to make the scheme more appealing,” said a Government source.

Fianna Fáil finance spokesperson Michael McGrath said the low take-up shows the scheme does not work.

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.

KBC Current Mortgage Offers

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KBC  is offering attractive mortgage deals for customers who are looking to buy their first home, subsequent home, or those simply looking to switch for better value.

  • Rates from as low as 3.30% fixed and 3.25% variable when you open a KBC current account.
  • 50% off KBC Home Insurance for 1 year for new residential mortgages that draw down up to 31st December 2015.
  • Clients who wish to switch to KBC before 31st December 2015 get €2,000 towards legal fees.

Terms and conditions apply.

Contact us to discuss on 01-5052718.

 

 

Royal London 10% off Mortgage Protection

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Royal London have announced they are now offering 10% off all price-matched mortgage protection premiums. This special offer runs from Monday 21st September until 30th October 2015.

In the event of death, mortgage protection will make a once off lump sum payment to cover the remainder of your Mortgage. As you pay off your mortgage, your protection cover will reduce to reflect the amount you owe.

Contact us on 01-5052718 to discuss this offer and receive a quote.

Having children now comes before buying a home

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Having a baby now comes before owning a home for a new generation that has little choice but to rent until their mid-thirties. Increased barriers to acquiring a home have raised the average age of Ireland’s first-time buyer by four years to 33. In 2005, the average first-time buyer in Ireland was about 29, but according to Real Estate Alliance (REA), this figure is up and still rising.

The newly emerging trend is more and more Irish couples are now starting their families in rental accommodation- a social shift which goes against the longstanding Irish tradition of buying your home first.

A combination of circumstances have combined to make it extremely difficult for young people to buy:

  • New Central Bank rules pushing up the deposit that must be saved for a house;
  • Returning emigrants finding it difficult to secure mortgage approval without a full year’s employment behind them;
  • The increase in contract work, as opposed to a “job for life”, making it difficult to get a mortgage;
  • A change in attitudes following the property crash and unwillingness to buy the “wrong” home.

More mortgage holders switch bank but total moving still tiny

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New figures from the banks show that 240 people switched their mortgage from one lender to another in the April to June period.

This is up from 108 in the same period last year, according to the Banking and Payments Federation.

Goodbody Stockbrokers noted that switching is now at the highest level in four years, but it still only represents approximately 4pc of total lending volumes.

Founder of the Askabout.com website Brendan Burgess said it was likely homeowners were waiting to see if variable rates will fall further before making any moves to switch.

Young people are moving back home to save for a deposit

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Thousands of younger people are moving back to their parents’ homes in a bid to save money for a deposit for a house, a survey has found.

The belief that Ireland is likely to follow Europe by becoming a nation of renters is widespread and particularly strong among the 18- to 24-year age group, the survey of 1,000 people found. Three-quarters of people in this age group believe Ireland will become a nation of renters.

But 70pc of all age groups believe that the expectation of owning their own home is now unrealistic.

And brokers have warned people not to be sucked in by “glitzy” offers like cash back and money for paying legal fees when it comes to choosing a mortgage provider.

More than a quarter of people between the ages of 25 and 34 said they had moved back to their parents’ homes to save for a deposit on a home, according to the survey commissioned by Aviva Home Insurance.

Mortgage affordability improves slightly over last six months

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Mortgage affordability has improved slightly over the last six months, according to lender EBS.

The EBS Affordability Index suggests that the proportion of disposable income required to fund a mortgage for the average first-time buyer working couple dropped to 19.5 per cent in April 2015, down from 20.6 per cent in October 2014.

As might be expected, the index shows that buyers in the Dublin housing market need a bigger chunk of their pay to meet their mortgage repayments.

In Dublin, a first-time buyer couple requires 22.6 per cent of earnings to fund their mortgage, down from 24.3 per cent in October 2014.

In Cork and Galway, the figure stands at 14.4 per cent and 13.4 per cent respectively.

Longford is the most affordable county in Ireland to buy a home, with a couple requiring only 6.9 per cent of their net income to fund their mortgage.

10 moments when you should review your life cover.

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Life insurance is one of those things people forget about once they’ve bought it. However, you need to review it occasionally as your situation and your commitments change.

Here are 10 instances when a life cover review is essential:

1 Buying a house

Your mortgage will be the biggest debt you ever take on. You need to be sure it will be paid off should you die early, especially if you’re the main breadwinner.Banks and lenders often try to sell you life insurance when you start on the property ladder, but you should always compare prices before going ahead as there could be better and cheaper cover elsewhere.

2 Getting Married

Once all the fun of your wedding is over, you need to think about your new responsibilities. How would your partner cope alone with all the financial commitments you’ve taken on if they can’t rely on your salary too?

3 Having your first child

If you haven’t already bought life cover, it’s vital to buy it once you start a family. And if you have only insured for a small amount, you definitely need to review it now. Food, clothing, child care, schooling and even holidays all cost more once you have a little one.

4 Adding to your family

A second, third or more children all put a strain on your household budget. You’ve probably already noticed how much more salary you need to keep the family going. Is your life cover enough to pay for their needs should the worst happen and you are no longer there to provide for them?

5 Moving home

A larger home is likely to mean a bigger mortgage. Make sure your life insurance is enough to pay it off and, if you’ve increased the term of your home loan, that it runs for long enough.

6 Inheritance planning

Life insurance isn’t just about paying off large debts such as your mortgage should you die. It’s also about providing for your family’s day-to-day bills once you are no longer bringing in a salary.

7 Moving job

Many employers offer a perk known as ‘death in service’ benefit. This provides a lump sum to your named beneficiaries should you die while working for the firm. The amount is typically set at four times your annual salary.

If you move job, check the terms of your new employment. If you no longer have this benefit, you could need to increase the amount of life cover you have.

8 Retiring

Depending on your pension, it may mean that once you die your pension stops or at the very least your widow or widower will receive a smaller amount. If you’re worried they won’t have enough to live on without your pension, you could continue your life insurance.

9 Getting healthier

If you give up smoking, tell your insurer. Your premiums may come down. If not, you can look around for another insurer to see if it will be cheaper.

You must have given up smoking for at least 12 months before it counts and you can’t still be using nicotine replacement products such as inhalers, patches or chewing gum.

10 Dangerous activities

Those who take part in dangerous sports and hobbies such as flying, climbing, scuba diving and parachuting, will be considered a higher risk than normal and will no doubt have to pay a higher premium. Alternatively, your cover will exclude death as a result of one of these activities. If the company didn’t know about these activities and you die as a result, the claim is unlikely to be paid