New Mortgage Customers Will Need Higher Incomes Than Compared To Decade Ago

New mortgage customers need remarkably higher incomes to buy a home, compared to the property price peak over a decade ago, a new analysis from the Banking and Payments Federation Ireland (BPFI) has revealed.

The organisation’s latest Mortgage Market Profile Report shows that 13% of first-time buyer mortgages and 7% of mover purchase mortgages were backed by incomes of up to €60,000 last year. This is compared to 51% and 28% respectively in 2005.

The report also found that the median total household income of first-time buyers increased by €6,000 to €77,000 from 2019 to 2021.

The average drawdown hit record levels in the first-time buyers new and mover existing segments in 2021. The average mover loan on new properties was approximately €4,000 lower than in 2008.

Brian Hayes, chief executive of the BPFI said it was important to note how different the mortgage market is now, ‘Mortgage interest relief was available on qualifying home loans drawn down between 2004 and 2012 and played a key role in reducing home mortgage costs.’

He added: ‘In 2008 alone, home buyers benefited from almost €705 million. Additionally, in 2015, the Central Bank of Ireland introduced limits on the loan-to-value and loan-to-income (LTI) ratios of new mortgages.’

It also reveals that Dublin remains at the top of the mortgage markets, with just over 30% of homes bought in the year to the end of December located there.

Cork was second place with 11.4%, followed by Galway and Limerick.

The highest median basic income, monthly repayments, loan values and property values for first-time homeowners or those building new homes were in Wicklow.

The study discovered that 81% of first-time buyers buy properties in their own county.

That said, in Meath, Kildare and Wicklow, Dublin borrowers made up 30-32% of first-time buyer mortgages and 17-24% of mover purchase mortgages on properties in those counties. This is because incomes in the capital tends to be higher than in other counties while movers from Dublin could also benefit from higher-value collateral.

The report showed that 23% of home mortgages in Limerick were on new properties, the lowest in the country.