First time buyers more confident about mortgage affordability

Fewer first time buyers have a deposit savings plan in place, decreasing from 84% before the summer to 74% currently. However, of those that do have a savings plan in place, there has been an increase of nearly €100 on the average saving per month, from €444 earlier in 2017 to €534 in August.
Bank of Ireland research with first time buyers has also shown an increase in those who feel confident they can afford mortgage repayments, from 89% before the summer to 94% now.

The research, which was first conducted by RED C in March/April 2017 and again in August 2017, showed that the cost of property remained the most significant challenge for four in ten (41%) first time buyers, while those expressing concern over the ability to save a deposit increased from one in four (26%) earlier this year to one in three (33%).
The research also showed an increasing preference for fixed rates, with 43% saying they are likely to choose this option (compared to 40% earlier in the year), and 94% citing ‘control over monthly repayments’ as important. Almost one in three (32%) are set to choose variable, and one in four undecided. Almost three quarters of respondents said that they will seek financial advice from their bank, with almost half speaking to family members.

Discussing the research, Karena O’Sullivan, Head of Mortgages, Bank of Ireland, said, “The research demonstrates a high degree of confidence from first time buyers in relation to mortgage affordability, and it’s positive to see that the average amount savers are setting aside has increased. However, more respondents are expressing concern over the ability to save a deposit, an issue which we have sought to address through our MortgageSaver product which provides a €2,000 top-up on customers’ savings.”

“Certainty and peace of mind in relation to monthly mortgage repayments are important to a significant proportion of respondents, with an increasing volume of first time buyers saying they will choose a fixed rate. We’re seeing continued strong demand from first time buyers and I’d encourage them to engage with us early, even if they’re only starting out on their mortgage journey, so that we can offer help and guidance,” said Karena O’Sullivan.

A large majority (90%) of respondents want to buy a house rather than an apartment, however almost one in three (31%) cited a lack of supply in the areas they’d like to buy as a challenge for them, with an increase in those willing to commute longer distances from home to work – almost half are prepared to commute over 20 kilometres.

Purchasing a second-hand home remains most favourable with 40% saying that was their goal while the preference for self-builds have increased from 16% to 20%, and the desire to buy a newly built home has decreased from 31% earlier this year to a current 25%. There has been a small increase in the number of first time buyers who are aware of the tax incentives applicable to them (61% to 66%).