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THE HIGHEST VOLUME of first-time buyers entering the housing market in the second quarter of a year since 2007 was recorded at the end of last month.
The Banking and Payments Federation of Ireland’s (BPFI) quarterly update on mortgage drawdowns has found that there was a 20% increase in the volume of first-time buyers entering the housing market last quarter compared to the first quarter of this year.
Though the high volumes represent that more and more people are drawing down mortgages to become homeowners, the BPFI says there’s “moderation” in the activity of the market.
Moderation in the market, as explained by Chief Executive of the BPFI, Brian Hayes, is reflected in the reluctance of those who already own or previously owned a property, drawing down a new mortgage and moving home.
These are called “mover purchase mortgages”, and the volume of drawdowns for them fell by 3.1% last quarter.
This means that, while more and more people – especially first-time buyers – are purchasing into their first home, those who already have paid their mortgage in full are not interested in moving.
It is the seventh consecutive quarter where mover purchases drawdowns have fallen, in year-on-year terms, according to the BPFI’s Hayes.
While this would usually create a good opportunity for first-time buyers to enter the market, it’s more likely that these mover purchase mortgages are not being drawn down as a result of the short supply of housing.
A recent report from Daft.ie found that housing supply in May had fallen all around the country.
A separate report from the CSO this month found that housing completions during the second quarter fell short of targets.
Today’s BPFI report says that more than a third of all mortgages went towards new properties, including self-builds, and reflects a four-percentage-point increase from the previous quarter.
But it’s worth noting that Government subsidies in the First-Time Buyer Scheme are only available to those moving into a newly-built home.
The figures in this report could intensify criticisms that the First-Time Buyer scheme is propping up the market, at a cost to those who want their first home.
While overall drawdown volumes increased by 2.2%, first-time buyer drawdowns increased by more than double that (5.5%). It is the highest volume of first timers entering the market at this point in a year since 2007.
Additionally, out of a total of 10,100 new mortgages which were were drawn drown by borrowers from April to June of this year, more than half (62.3%) of these borrowers were first-time buyers.
The trend is likely to continue as out of the 4,480 mortgage applications which were approved last month, more than half of those are going to first-time buyers.
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A lot of people are not interested in moving because they’ve spent long enough in debt sitting in every week paying mortgages and loans and want a bit of freedom can’t blame them for that. For first time buyers the pressure is immense, they have destroyed peoples futures, 18 years paying my own and have had maybe 3 or 4 nights out a year at best and no foreign holidays don’t even need a passport now, just a slave to a mortgage.
@William Slevin: I agree and have a friend in his late 50s paying heavy rent working every hour sent to him worrying what he will do when he reaches pension age he won’t be able to afford to keep that up. Many more like him I feel for them horrible position to be stuck in.
@Paddy C: Yes, this is what we vote for, the continuation of ‘people as product’
@Paddy C: what happens the people on HAP when they reach retirement age and stop working? government continues to pay their rent. better off earning 100k plus or on a low paid job getting state benefits in this country.
The banks are approving amounts far to low to buy a property, but it’s recorded as loan approval.
@087 bed:
And the relevance of that to an article about drawdowns is what exactly?
@P. J.: Read the article again, pay attention to the last paragraph. All the Best.
How many are English people availing of the €50,000 grant for doing up a derelict property?
@Nick Vasilakis: You mean how many are clever?
Debt slaves, for 35 years.
@James Doyle: Not if you live in places like Leitrim, Longford….. Etc. The whole country doesn’t need to live around Dublin or the other main cities. That’s part of the problem!
@another one? what’s going on is the semi state sec:
Grand idea but for one problem, the whole country (or a lot of them) would prefer to live around Dublin or the other main cities.
Remember that “great decentralisation” plan back in the 90s? It was going to free up housing in Dublin.
It died a death because very few people wanted to move.
Second hand sellers are holding on to their houses because they are chasing that higher price.
When house prices are rising, people put off selling to “wait for it to go up more”, helping to create a scarcity to drive it up more.
But the moment it looks like a crash has started they will rush theirs on to the market, creating a glut, increasing the fall.
Round and round we go.
@P. J.: it’s difficult to say, ideally this would need to backed up with market data otherwise its just an opinion or guess. I know people that have looked at downsizing and after the cost of buying in the area and paying management fees where there were none before there was not that much benefit to downsizing.
@Allo Allo:
Fair enough, it was intended as an opinion (or rant!!)
I should point out, I work in the sector.
@P. J.: I wouldn’t agree that everyone is hanging onto their properties to get more at all, more that it just doesn’t pay to move and this needs to change. A lot of people I feel would like to downsize but unless it’s made a more attractive move they’d stay put.
I believe if there were more retirement communities built with independent living (home from home like) something like in the States for example) rather that ‘old folks homes’ many houses might come on stream with the more mobile of our elderly moving into them. Perhaps sell their own homes, rent this unit for a nominal cost then when they pass its rented by the next person or couple. There could nurse(s) living on campus, hairdressers, beautician?
@Lydia Mcloughlin:
To be honest, good in theory but I’m not sure if it would work.
First thing I think off , the government changes to the fair deal system that allows people in nursing homes rent out their homes , I work in a large town and to my knowledge , not one house has come on the market because of it.
In my experience the vast majority want to stay in the family home.
In my own estate, large 4/5 bed detached houses built in the 70s so loads of retired couples and widows/widowers. None are selling up to move to something smaller, they are spending tens of thousands on things like external insulation so they can stay put in their 5 bed house……
My place is worth around 200k (paid off, no mortgage). I would move somewhere else if those 200k would cover a large part of the new house/apartment but it doesn’t. I’ll sit it out instead. Too risky taking out mortgage at my age with uncertain future reg employment opportunities.
Lack of bridging finance makes it very hard to move. Many prospective movers will not put their home on the market without knowing where they will buy. In a market with short supply, prospective buyers who need to sell lose out to cash buyers or first time buyers.
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