New mortgage holders now need significantly higher incomes to buy a home compared to the property price peak over a decade ago.
That's according to a new report from the Banking and Payments Federation Ireland (BPFI).
According to their Mortgage Market Profile Report, 13% of first-time buyer mortgages and 7% of mover purchase mortgages were backed by incomes of up to €60,000 last year, compared to 51% and 28% respectively in 2005.
It also found that the median total household income of first-time buyers rose from €71,000 to €77,000 between 2019 and 2021.
"With average house prices and loans returning to levels last seen in 2008, our latest mortgage market profile report shows that new mortgage customers now need higher incomes than in the past to purchase a home," BPFI chief executive Brian Hayes said.
“It’s important to note, however, that the mortgage market 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,” he said.
Mr Hayes also noted that since 2015 the Central Bank’s strict loan-to-value and loan-to-income ratios have applied to most mortgages.
The median loan-to-income for FTBs fell from 4.5 in 2008 to 2.7 in 2013, according to Central Bank data, before rising to 3.2 by 2017.
“This essentially means that new mortgage customers need higher incomes than in the past,” Mr Hayes said.
The report also shows that Dublin remains at the top of the mortgage markets, with just over 30% of homes bought in the year to the end of December last located there.
Cork came in second place with 11.4%, followed by Galway and Limerick with 4.7% and 3.7% each..
The highest median basic household incomes, monthly repayments, loan values and property values for first time buyers or those building new homes were in Wicklow while only 23% of home mortgages in Limerick were secured on new properties – the lowest share in the country.
The study also found that 82.5% of home mortgage customers build or buy properties in the county where they live.
However, the importance of non-resident mortgaged buyers varied across the country, with the Dublin commuter belt a notable exception. Dublin-based borrowers represented 30-32& of first-time buyer mortgages on properties in Meath, Kildare and Wicklow, as well as 17-24& of mover purchase mortgages on properties in those counties.
