Real Estate Alliance (REA) has welcomed plans by the Central Bank to provide relief to first-time buyers under its new mortgage rules.
The new rules will enable banks to lend up to 90% of the value of the home to first-time buyers up to a limit of €220,000.
This means that first time buyers will need a 10% deposit for the first €220,000 of their property's cost and 20% of whatever is above this limit.
In most other cases banks will only be able to lend up to a maximum of 80% of a property’s value.
“A blanket 80% mortgage cap would have proved excessive towards first time buyers, making it difficult for them to get on the property ladder,” said REA CEO Philip Farrell.
“Based on average house prices, a 20% deposit rule would have required €70,000 upfront from an individual or couple purchasing a property in South Dublin. (According to figures from REA's latest property survey, an avergae three-bed semi in South Dublin is valued at €350,000).
“However, based on the more lenient deposit requirements, that figure comes down to €48,000 for a first time buyer.
“Outside the South Dublin area, buyers will still be entitled to borrow up to 90% of the purchase price of their first home.
“This in turn will assist in preventing further pressure on rental values in large parts of the country which would have ensued if they had proceeded with the initially intended figures.
“Rental values have increased by up to 20% over the last 18 months in particular parts of the country.
“There is absolute merit in what the Central Bank are introducing and it is to be welcomed in assisting in the prevention of a property bubble in the future.
“This has proven successful in particular parts of the world, especially Asia.
“However, it remains somewhat untested in this part of the world.”
Real Estate Alliance (REA) is Ireland’s leading property group of
Chartered Surveyors with over 50 branches nationwide, comprising many of the country’s longest-established auctioneers and estate agents.
