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Mortgage drawdowns

House hunters' spending power drops by 9% as average house price continues to rise

House hunters now have an average of €27,000 less to spend on a home compared to this time last year.

PEOPLE SEEKING TO buy a house have had their spending power drop by 9% in the last year due to rising house prices, according to a new report from

The report found that house hunters have an average of €304,000 to spend on a home, which is €27,000 (9%) less than it was a year ago.

Additionally, mortgage seekers have €11,000 (15%) less savings to put towards a deposit for a mortgage compared to the same time last year.

This is despite a 24.5% increase in the amount of mortgage drawdowns in the second quarter of 2022 compared to the same period in 2021.

According to the Banking and Payments Federation Ireland (BPFI), 11,985 new mortgages were drawn down by borrowers during the second quarter of 2022, to the value of €3.13 billion.

Of these mortgages drawdowns, 50% were first-time buyers.

According to the report, these reduced savings are leading first-time buyers and home movers to reduce their expectations for the amount of money they will spend on a home.

Paul Monahan, General Manager at Daftmortgages says that this is either attributable to the rising cost of living or spending returning post-pandemic.

“It could be argued that the 15% reduced saving and therefore 9% reduced spending power for these house hunters may be a result of spending bouncing back as the covid-19 pandemic restrictions lifted or could also be due to these customers feeling the pinch due to rising cost of living,” Monahan said.

In particular, couple first-time buyers have seen their average savings dropping by €15,000, or 23%, compared to this time last year.

Daftmortgages have said that they will shift to borrowing 6% more on their mortgages to make up the difference, leading to an additional €59 in their monthly repayments.

Repayments will shift from an average of €872 per month to €931 per month, leading to an extra €708 being paid each year.

Alongside this, the BPFI has said that the average first-time buyer mortgage drawdown was €263,312, which is a year-on-year increase of 13% and the highest level recorded since data began being collected in 2003.

The previous highest level was in the first quarter of 2008, when the average first-time buyer drawdown was €251,831.

Additionally, single first-time buyers have €10,500 less savings for a deposit than this time last year, which is a drop of 19%.

This has lead them to reduce their expectations for the amount they can spend on a home by 7% to €215,00.

Home movers have also had to adjust their expectations for how much they can spend due to property prices rising by €30,000 in the last year.

Mortgage approvals

The BPFI has also announced that 5,960 mortgages were approved last month, with 2,675 being for first-time buyers.

Mortgage approval in June rose by 11.3% month-on-month and by 14.5% year-on-year.

The value of these approvals was €1.66 billion, with first-time buyers making up €737 million.

Note: Journal Media Ltd has shareholders in common with publisher Distilled Media Group.

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