New research from Bank of Ireland amongst first time buyers shows that 84% of those hoping to buy their first property have a deposit saving plan in place, an increase of 10% on 2016 research.
Despite this, 43% of respondents admitted they would need to get financial help from their family or friends in order to meet the deposit requirements, even though nearly half (46%) have been saving for two years or more. The cost of property was cited as a challenge by a significant number (87%) of respondents.
Almost half (49%) of those surveyed said the lack of supply in the areas they wanted to buy was a challenge, with more than half (57%) citing the ability to save the deposit.
A significant majority (90%) of those surveyed want to buy a house rather than an apartment despite recent industry figures suggesting that buying a house is beyond the reach of many first time buyers. Uncertainty in interest rates is having an impact – among those who expressed a preference, 56% will opt for fixed rate mortgage, ahead of 44% for variable. 28% of respondents were undecided on their rate option. This preference for fixed rate is linked to the fact that 91% of respondents cited “control over my monthly repayments” as important.
39% said they didn’t know about the tax incentives offered to buy newly built homes, but almost six in ten (58%) of those aware of the initiative believe it will help them get on the property ladder. This was reinforced by the fact that 31% of those surveyed said they would look to buy a new home rather than build their own or buy second hand – an increase from 23% in 2016. A further 39% of those surveyed were unaware of the Central Bank’s regulation allowing first time buyers to take out a 90% mortgage regardless of the property value, however the majority of those aware of the regulation (63%) agreed it would help them get a mortgage earlier than planned.
The research, which was conducted amongst first time buyers* by RED C in March and April, showed that of those who are actively saving for their deposit, the average amount being put aside per month is €444, down slightly on 2016 research. Three in four (75%) first time buyers surveyed are currently renting and pay an average of €820 per month. The average age of the first time buyers surveyed was 34 and half have children.
Discussing the survey results, Karena O’Sullivan, Head of Mortgages, Bank of Ireland said, “It is very evident that there are a number of issues facing first time buyers, particularly with rents and property prices increasing and supply not meeting demand across the country. It was interesting to see that a large proportion have set their sights on buying a house over an apartment, indicative perhaps of the life stage many first time buyers in Ireland are at, with many aged in their mid-thirties with children.
“Bank of Ireland continues to see momentum in the mortgage market this year with strong demand from the first time buyer segment in terms of drawdowns and approvals. We’ve focused on developing products to help support first time buyers at all stages of the process.
We see a good reaction to our MortgageSaver product, which helps first time buyers with a top-up of €2,000 on their savings when they draw down their mortgage. We’re also experiencing strong interest in our Cashback PLUS proposition, which offers current account customers 2% cashback on their new mortgage at drawdown, along with an extra 1% cashback five years later. We will continue to focus on practical supports such as these, which help first time buyers on their home buying journey.”
Notes to editor:
*Research was conducted by RED C between March 31st and April 6th 2017 with 204 people aged 25-45 who are ‘planning to buy or build their first home in the next few years’
MortgageSaver account provided by Bank of Ireland. You must save from €200 to €2,500 per month for minimum of 6 months or more with minimum total savings of €5,000 to qualify for the bonus. The Bank reserves the right to withdraw the offer at any time. Terms and conditions apply. Bonus subject to DIRT at prevailing rate. Offer available to First Time Buyers who draw down a Bank of Ireland Mortgage within 30 months of account opening. Paid after drawdown. See bankofireland.com/mortgagesaver.
Bank of Ireland is regulated by the Central Bank of Ireland.
3% cashback available to First Time Buyers, Movers and Switchers who are Bank of Ireland Current Account customers and draw down a new mortgage between 5 September 2016 and 30 November 2017. 2% cashback on drawdown of a new mortgage plus 1% bonus in 5 years subject to meeting the conditions of the mortgage.
The lender is Bank of Ireland Mortgages. Lending criteria and terms and conditions apply, over 18s only. A typical mortgage to buy your home of €100,000 over 20 years with 240 monthly instalments costs €615.79 per month at 4.2% variable (Annual Percentage Rate of Charge (APRC) 4.3%). APRC includes €150 valuation fee and mortgage charge of €175 paid to the Property Registration Authority. The total amount you pay is €148,114.60. We require property and life insurance. You mortgage your home to secure the loan. Maximum loan is generally 3.5 times gross annual income and 80% of the property value (90% of the property value for first time buyers). A 1% interest rate rise would increase monthly repayments by €54.02 per month. The cost of your monthly repayments may increase – if you do not keep up your repayments you may lose your home.
Warning: If you do not keep up your repayments you may lose your home.
Warning: You may have to pay charges if you pay off a fixed–rate loan early.
Warning: If you do not meet the repayments on your loan, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit in the future change.
Bank of Ireland Mortgage Bank trading as Bank of Ireland Mortgages and The Mortgage Store is regulated by the Central Bank of Ireland.