New mortgage customers need significantly higher incomes than in the past – latest BPFI mortgage report
- Most home mortgage customers (82.5%) build or buy properties in the county where they live
- Dublin borrowers represented 30-32% of FTB mortgages on properties in Meath, Kildare and Wicklow
- Wicklow had the country’s highest median basic household incomes, monthly repayments (excluding self-builds), loan values and property values.
Tuesday 24th May 2022 – The latest Mortgage Market Profile Report, published today by Banking & Payments Federation Ireland (BPFI) shows that new mortgage customers now require significantly higher incomes to purchase a home even when compared to the peak more than a decade ago. The report for H2 2021, the second in the BPFI series, looks at who is taking out home loans, what types of loans are they taking out, the types of properties involved and how borrowers, loans and properties differ around the country.
Key findings from the report on new borrower incomes show:
- The median total household income of FTB borrowers increased from €71,000 to €77,000 between 2019 and 2021.
- Looking back to 2005 and focussing on mortgages financing new properties, the report shows that 51% of FTB mortgages and 28% of mover purchase mortgages had incomes up to €60,000 in 2005, compared with only 13% and 7%, respectively, last year.
Commenting on the contributing factors and the changes in the mortgage market over the last decade, Brian Hayes, Chief Executive, BPFI said: “With average house prices and loans returning to levels last seen in 2008 our latest Mortgage Market Profile report show that new mortgage customers now need higher incomes than in the past to purchase a home.”
“It’s important to note however that the mortgage market now is very different now. Mortgage interest relief was available on qualifying home loans drawn down between 2004 and 2012 and played a key role in reducing home mortgage costs. In 2008 alone, home buyers benefited from almost €705 million. Additionally in 2015, the Central Bank of Ireland introduced limits on the loan-to-value and loan-to-income (LTI) ratios of new mortgages. The median LTI for FTBs fell from 4.5 in 2008 to 2.7 in 2013, according to the Central Bank of Ireland, before rising to 3.2 by 2017. This essentially means that new mortgage customers need higher incomes than in the past.”
Most mortgaged home buyers are county residents
This report also examines where borrowers are buying their homes and shows that most home mortgage customers (82.5%) build or buy properties in the county where they live (based on the main
borrower), with 81.4% of FTBs acquiring properties in their own county. However the importance of non-resident mortgaged buyers varies across the country with the Dublin commuter belt a notable exception. Dublin borrowers represented 30-32% of FTB mortgages on properties in Meath, Kildare and Wicklow, as well as 17-24% of mover purchase mortgages on properties in those counties. The report attributes this to higher incomes in Dublin than in other counties in addition to the fact that home movers from Dublin may also benefit from higher-value collateral.
Regional differences in drawdown volumes and mortgage repayments
The BPFI Mortgage Market Profile Report provides a wealth of data on the regional breakdown of the mortgage market. Dublin remains on top with 30.6% of home purchase mortgages in the twelve months ending Dec 2021. Outside Dublin Cork is the largest single market with 11.4% of mortgages, followed by Galway and Limerick with 4.7% and 3.7% each.
Key regional findings from the report include:
- For FTBs buying or building new properties, Wicklow had the country’s highest median basic household incomes, monthly repayments (excluding self-builds), loan values and property values.
- Only 23% of home mortgages in Limerick were secured on new properties – the lowest share in the country.
- About 37% of FTB and 24% of mover purchase mortgages in Dublin were for terraced houses – the only region in the country where this dwelling type had a substantial share.
- At €194,500, the South and Mid West has the lowest median mover purchase loans in the country.
- Self-builds accounted for 78% of new properties financed by home mortgages in the South and Mid West region – the highest share in the country.
- The median repayment on FTB mortgages for existing properties in the West was the lowest in the country at €687.
The BPFI Mortgage Market Profile Report H2 2022 is available on the BPFI website here.
For further information contact: Jillian Heffernan, Head of Communications, 087 9016880 or firstname.lastname@example.org
About BPFI: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland. Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has over 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here. www.bpfi.ie