Rachel McGovern, Director of Financial Services.
RResponding to today’s CSO house price figures indicating little change in house prices with an increase of 0.5pc in Dublin and a drop of 0.2pc outside Dublin in the year to October, Brokers Ireland said that “despite what would appear to be a steadying in house prices there is little hope on the horizon for aspiring buyers.”
Rachel McGovern, Director of Financial Services at the organisation which represents 1,250 broker firms, said: “Those who want to buy and who do not have substantial family support in acquiring a deposit, particularly in city areas, are being forced into renting where rents have spiralled way beyond what mortgage repayments would be for the same properties, sometimes double. Alternatively they are depending on the kindness of family and friends to provide accommodation, where they can.”
In this regard she said it was disappointing that the Central Bank did not see its way to tapering the mortgage lending rules, to take account of this reality.
“Firstly they were introduced too early shutting out first-time buyers when properties were cheapest, and now they are shutting out access to better value - of buying over renting. However, it has to be said that the main cause of the current dysfunction is lack of supply, nonetheless, policy should be able to respond better to the reality of people’s lives,” she said.
“This situation has become prolonged and is now generational. It is appalling that so many people are forced to put their lives on hold, not reaching the benchmark of home ownership that delineates the start of serious financial planning.”
She said studies show repeatedly that Irish people want to buy their own homes. “And buying a home at an affordable price is, and has always been, the best way in which to grow personal wealth over the longer term. In this regard recent comments from social policy expert, Professor Tony Fahey are noteworthy,” she said.
Brokers Ireland has already called for the 90pc LTV (loan-to-value) to apply across the board to all borrowers and for the LTI (loan-to-income) threshold to be amended to 4.5 times gross income, in line with the UK.
Such changes would obviate the need for exemptions which have become critically important for many borrowers because the 3.5 times gross salary LTI threshold, along with the 80pc LTV that applies to second and subsequent buyers (SSBs) but not first-time buyers.