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The level of mortgage drawdowns is now at its highest since the boomtime of the Celtic Tiger era.

Close to 53,000 mortgages were drawn down last year, with a value of more than €14bn, according to the Banking and Payments Federation Ireland (BPFI).

This is the highest number and value of mortgage drawdowns since 2008, the peak of the boom that ended in a property price crash. The number of new mortgages is up 21pc on the previous year.

The number of first-time buyers drawing down a mortgage had now hit levels last seen in 2007, the banking lobby group said in a report on home-lending activity last year.

The BPFI said that, over the past five years, first-time buyers had drawn down close to 108,000 home loans.

A total of 58,276 mortgages to the value of €15.8bn were approved last year, but not all of these ended up being issued, because home buyers could not find a property at a price they could afford.

The surge in the value and number of borrowers comes after a sustained period of double-digit property price growth and close to 30,000 homes being built last year.

In the last three months of 2022 alone, almost 16,000 new mortgages to the value of €4.3bn were drawn down by borrowers.

This is a jump of close to 20pc in the number of mortgages issued, and a rise of 31.5pc in the value of the home loans compared with the last three months of 2021.

First-time buyers are the biggest group getting a housing loan.

They represent almost half (47pc) of the number of drawdowns.

Chief executive of the banking body Brian Hayes said the figures showed what he called a significant number of both drawdowns and approvals, and it was a particularly strong year for first-time buyers.

“Drawdown volumes rose by 21pc to 52,634, while values rose by 34.3pc to almost €14.1bn. These were the highest levels since 2008,” he said.

Mr Hayes added that first-time property purchasers continued to drive the growth.

Around 25,000 of the mortgages drawn down last year were for first-time buyers.

Mr Hayes said the number of first-time buyer mortgages was at its highest level since 2007. It was 26pc higher than in 2008.

By contrast, mover-purchase volumes were 47pc lower than in 2008.

Mr Hayes said: “Looking to the year ahead, we expect housing and mortgage demand to remain strong despite the challenging economic environment.

“Almost 108,000 first-time buyer loans have been drawn down in the past five years and lenders will continue to support customers as they seek to buy or build a home.”

Figures for December show that 3,635 mortgages were approved in that month.

Close to half were for first-time buyers, while movers account for around a fifth of the approvals.

The number of mortgages approved in December fell by 33.1pc in the month when compared with November, and by 5.7pc when last December is compared with the same month in the previous year.

Mortgages approved in December were valued at €996m.

Meanwhile, research undertaken by the Irish League of Credit Unions has found that those considering upgrades to their home are focused on cost savings as well as other factors such as comfort and warmth, and to be more climate-friendly.

The survey of 1,000 people, undertaken by iReach, shows that three-quarters of people who are planning to carry out home energy upgrades are motivated by potential savings to their bills.

 

Source: Irish Independent. 1st February 2023

Bank of Ireland said today it will increase interest rates for a number of mortgage and deposit products.

It said this follows increases of 2.5% in European Central Bank rates since July of last year.

The bank has announced a 0.75% increase for fixed rates on new mortgages – effective from today.

It also announced a 0.5% increase for the fixed rates available to existing mortgage customers.

This includes customers who are coming to the end of their fixed rate period and are seeking to re-fix their mortgage, and tracker rate or variable rate customers who wish to move to a fixed rate.

Customers who already have credit approval and who draw down their mortgage by February 21 can still avail of the previous fixed rates, it added.

The bank had previously increased its fixed rates for new mortgages in November.

Bank of Ireland today also announced a 0.5% increase for “Regular Saver” personal deposit accounts, which will allow customers earn 0.75% on their “Mortgage Saver”, “Goal Saver” and “Child Save” accounts, capped at up to €15,000.

The increase takes effect from Friday January 27.

The bank also said it will launch a new one year term deposit account for personal customers at 0.5%, which is capped at €100,000.

According to recent Central Bank figures, Irish new mortgage rates are the third lowest in the euro area after Malta and France.

Source: RTÉ News, December 15 2022

The main banks here say they will all be passing today’s ECB interest rate hike on to tracker mortgage customers, but variable and fixed rate borrowers will be spared for now.

There are around 200,000 tracker mortgages remaining in the country, while there are 130,000 people whose loans are on variable rates.

In a statement, Bank of Ireland said its tracker rates will increase by the 0.5% announced by the ECB at lunchtime.

“For most customers, this change will take effect from 10 January 2023,” it said.

“Customers don’t need to take any action right now. Bank of Ireland will write to all tracker mortgage customers confirming the new interest rate, the effective date, and their new repayment amount.”

It added that no decision has been made in relation to other products and all rates continue to remain under review.

It was a similar story from AIB, which said tracker customers will see their rates change in line with their contracts following the ECB action.

While Permanent TSB also confirmed that it will pass on the rate change to tracker borrowers, as per contracts.

Rates on other products will remain under review, a spokesperson added.

Ulster Bank, which has sold many of its mortgages to Permanent TSB, said it would increase the rates on its remaining tracker mortgages, including offset mortgage rates linked to the ECB rate, with the rises due to take effect from January 18.

KBC Bank Ireland said its tracker rates would also rise and all other mortgage rates are kept under constant review.

Pepper Finance, which services thousands of mortgages on behalf of funds, said tracker rates would also rise, but there would be no change to variable rates at present.

“It will have no immediate impact on variable rate customers, and no decisions have been made on passing on this additional ECB increase,” a Pepper spokesman said.

“We are acutely aware this is a challenging time for many people and our team is on hand to help anybody concerned about their ability to meet the payments, with a broad range of solutions which we can tailor to their individual situation.”

Non-bank lender, Avant, said keeps interest rates under review but only comments on a pricing change at the time of a formal announcement to its customers and brokers.

Irish banks have so far been slow to pass on the four rate increases announced by the ECB since July to their customers.

 

Source: RTÉ News, December 15 2022

THE European Central Bank announced another hike in its key interest rates in a move that will pile more pain on those with trackers and variable rates.

The move is expected to hit those whose mortgages have been sold to vulture funds hardest as they are stuck on variable rates that are the highest in the country.

The main refinancing rate of the European Central Bank (ECB), which is directly linked to the interest rate charged on trackers and influences variable rates, has gone up by 0.5 percentage point.

It is the fourth ECB rate hike since the summer.

Each 0.5 percentage point rise in European rates adds around €25 to monthly repayments for every €100,000 owed on a typical tracker mortgage. Over a year this is €300 in extra repayments.

The cumulative impact of the four rate rises will be close to €3,000 on a typical €200,000 tracker on a 25-year term.

The ECB, which is headed up by Christine Lagarde, has been pushing rates up aggressively in an attempt to rein in prices that have soared in the last year.

The European economies have been under inflationary pressure blamed on the reopening of economies after the Covid-19 pandemic, driven by supply bottlenecks and then surging energy costs due to Russia’s invasion of Ukraine.

The central bank for the 19-country euro zone has raised its key rates four times now.

Economists expect the ECB to continue to hike benchmark rates, but at a slower pace, with inflation expected to be close to a peak and the Frankfurt institution looking to reduce its vast holdings of government bonds.

Pepper, which services around 60,000 mortgages owned by vulture funds, said the new increase in ECB rates will initially only affect tracker mortgage customers, where such increases are automatically passed on as part of their contract.

“It will have no immediate impact on variable rate customers, and no decisions have been made on passing on this additional ECB increase.”

It said it was “acutely aware this is a challenging time for many people and our team is on hand to help anybody concerned about their ability to meet the payments, with a broad range of solutions which we can tailor to their individual situation”.

Mortgage servicers such as Pepper and Start and the funds that own the loans have been heavily criticised for passing on all four ECB rate rises in full in most of their customers.

These mortgage holders are typical stuck on variable rates as they servicers and vultures will not offer them the option of fixing their rates.

And most of those whose mortgages are owned by vultures are unable to switch lender as many have been in arrears in the past, or have a split mortgage, which part of the loan is put aside with repayments being made on it at a later date.

People whose loans were sold have already seen their rates go as high as 6.5pc, with some now at 7pc.

They have no option to fix, prompting consumer advocates to say they are “mortgage prisoners”.

Latest figures from the Central Bank indicate that there are just under 200,000 mortgage accounts on a tracker rate.

Another 150,000 or so are on variable rates.

Tracker rates are hit every time there is an ECB rate rise. The main banks have not increased their variable rates, but non-bank lenders and vulture funds have been pushing up variable rates.

 

Source: Irish Independent, December 15 2022

House prices could fall 12pc by the end of the decade if the Government was to meet its housing target and build 35,000 homes a year.

To achieve it would require more public money, higher numbers of foreign construction workers and more domestic workers moving from commercial to residential projects, a report by the Economic and Social Research Institute (ESRI) said.

“The issue is we do need to increase and find these workers,” said ESRI research professor Kieran McQuinn, one of the report’s authors.

“Increasing housing activity is clearly required in the domestic economy given the imbalance observed between the structural demand for housing and the actual supply. Definitely some realignment is going to take place between commercial and residential.”

The ESRI estimates the Government will miss its annual housing targets by around 10,000 units a year to 2030.

That means it would complete around 25,000 new dwellings a year instead of a targeted 35,000.

Meeting the 35,000 a year target would take the heat out of the housing market while increasing construction wages by 1pc by the end of the decade, the ESRI found.

ESRI analysis shows overall investment in home building has not recovered since the financial crisis, and is less than half the size it was in 2000, as a proportion of overall construction.

Investment in “other building and construction” – which includes commercial real estate but excludes home improvements – is now back to Celtic Tiger levels.

That means the number of new workers required “may not be as great” if some are redeployed from the commercial sector, the report said.

The study found the movement of foreign construction workers into the country has been “minor” compared to sectors such as IT and manufacturing since the 2008 crash.

In 2016, there were high numbers of French, German and Indian workers in IT, manufacturing and healthcare, with a proportion also in scientific and technical jobs.

Except for Romanian workers, the number of non-Irish workers in construction was negligible that year.

However, the study acknowledged the “high cost of housing itself can prove a challenge in attracting migrants” and migration “will put further upward pressure on house prices in the short term”.

The ESRI is calling on the Government to consider adding construction to its “critical skills” list for visas, and says a better use of vacant properties, modular housing and land market reform could help boost completions.

It said more public funding is needed, as the growth of new bank lending for construction has slowed faster than other sectors.

The study comes at the same time as a slowdown in housing starts and in overall building activity.

Residential building activity fell 16.2pc between July and September, compared to the previous three months, while housing commencements have slowed by about 10,000 since the first three months of the year.

The Government is on track to beat its house building target this year but to miss it in 2023.

Population growth over the last five years has risen at around three times housing stock, figures from the Banking and Payments Federation of Ireland (BPFI) show.

Increasing demand means house prices could continue rising without a “substantial increase in supply”, the BPFI said this week.

Annual house price growth slowed to just under 11pc in September, from a high of over 15pc earlier this year. But rental costs are surging, and are up by about 85pc over the last decade, the BPFI said.

Source Irish Independent 9/12

A grant of up to a maximum of €30,000 will be available for the refurbishment of vacant properties for occupation as a principal private residence, including the conversion of a property which has not been used as residential heretofore. This will be subject to upper limits for the types of work specified below having regard to a reasonable cost assessment by the local authority. The grant is inclusive of VAT cost of the works.

Where the refurbishment costs are expected to exceed the standard grant of up to €30,000, a maximum top-up grant amount of up to €20,000 will be available where the property is confirmed by the applicant to be derelict (i.e. structurally unsound and dangerous) bringing the total grant available for a derelict property up to a maximum of €50,000   Click here for details https://www.gov.ie/en/publication/c2183-croi-conaithe-towns-fund/

The Government of Ireland (Department of Housing, Local Government and Heritage), in partnership with Participating Lenders, has introduced a Shared Equity Scheme to help you bridge the gap between your deposit and mortgage, and the price of your new home.

Who can claim the Help to Buy (HTB) incentive?

To claim HTB, you must:

• be a first-time buyer
• buy or build a new property between 19 July 2016 and 31 December 2021
• live in the property as your main home for five years after you buy or build it
• be tax compliant, if you are self-assessed you must also have tax clearance.

To qualify, you must not have previously bought or built a house or apartment, either on your own or jointly with any other person. If you are buying or building the new property with other people, they must also be first-time buyers. If you have inherited or been gifted a property it will not affect your eligibility. If you are buying the property, you must have signed a contract to buy that property on or after 19 July 2016. If you are self-building, you must have drawn down the first part of the mortgage on or after that date.

Approved developers and contractors

The contractor you are purchasing your home from must be approved by Revenue. You can check the list of approved developers and contractors to make sure that your developer or contractor is approved. [su_accordion][su_spoiler title=”What type of property qualifies? ” open=”no” style=”default” icon=”plus” anchor=”” class=””] To qualify for HTB, the property that you build or buy must be:

• your home
• newly built with the construction subject to Value Added Tax (VAT) in Ireland.

The property must never have been used, or have been suitable to use, as a residential home. If the property was non-residential, but has been converted for residential use, it may qualify for HTB. If you buy or build the property as an investment, it does not qualify for HTB. Purchase value The purchase value of a new build means the price that you bought it for. For self-built property, the purchase value is the approved valuation by the lender at the time that you took out the mortgage. If you bought the property between 19 July 2016 and 31 December 2016, the purchase price must be €600,000 or less. If you bought it after 1 January 2017, it must be €500,000 or less. Mortgage You must take out your mortgage on the property with a qualifying lender. This loan must be used only for buying or building the property. The loan must be at least 70% of the purchase value of the property. This is known as the loan to value ratio. You are allowed to have a guarantor on the loan. [/su_spoiler] [su_spoiler title=”How much can you claim?” open=”no” style=”default” icon=”plus” anchor=”” class=””] The amount that you can claim is the lesser of:

• €20,000 (increased to €30,000 for enhanced relief)
• 5% of the purchase price of a new home. For self-builds this is 5% of the completion value of the property. This is increased to 10% for enhanced relief.
• the amount of Income Tax and Deposit Interest Retention Tax (DIRT) you have paid for the four years before your purchase or self-build.

The maximum payment is €20,000 per property (increased to €30,000 for enhanced relief). This cap applies regardless of how many people enter into a contract to buy a house. Universal Social Charge (USC) or Pay Related Social Insurance (PRSI) are not taken into account when calculating how much you can claim. Enhanced Help to Buy Scheme As part of the Government’s July Jobs Stimulus package a temporary enhanced HTB incentive was introduced.  During the period from 23 July 2020 to 31 December 2020, applicants will be eligible for increased relief if they:

• • sign a contract for the purchase of a new house or apartment

 

• or

 

• make the first draw down of the mortgage in the case of a self-build property,

The maximum HTB refund is calculated at the lesser of:

• €30,000 (up from €20,000)
• 10% (up from 5%) of the purchase price of a new home. For self-builds this is 10% (up from 5%) of the completion value of the property.
• the amount of Income Tax and Deposit Interest Retention Tax (DIRT) you have paid for the four years before your purchase or self-build.

Applicants that made a HTB application under the original scheme, may satisfy the enhanced HTB requirements. They should cancel their original HTB application and reapply to avail of the increased relief. For further details please see  www.revenue.ie  How will the refund be paid? If you bought or built the property between 19 July 2016 and 31 December 2016, the refund will be paid directly to you. If you buy a new build after 1 January 2017, the refund will be paid to the contractor. If you self-build the property after 1 January 2017, the refund will be paid to a bank account you hold with your loan provider. [/su_spoiler] [su_spoiler title=”What do you need to do before you apply? ” open=”no” style=”default” icon=”plus” anchor=”” class=””] Before you apply, you must be registered for either:

• myAccount, if you are an employee and pay tax through PAYE
• Revenue’s Online Service (ROS), if you are self-employed.

If you pay tax through PAYE Before you apply for HTB, you must submit a Income tax Return for each year you wish to apply for a payment and pay any outstanding tax due. Use myAccount to submit an Income tax Return for the years from 2015. Online Income tax Returns are pre-populated with your pay and tax details. If you need to submit a paper Income tax return (form 12) for 2014, you can download the form and submit on paper. When you have completed this form, you can scan it and then upload it in MyEnquiries. To do this, you should:

• click ‘Add new enquiry’
• select ‘Help-To-Buy scheme’ from the dropdown options available under ‘My Enquiry relates to’
• select ‘Income tax return (Form 12 2014)’ from the dropdown options available under ‘And more specifically’
• attach the scanned pages of your Income tax Return (Form 12)
• submit your enquiry.

If you are self-employed If you are self-assessed, you must be fully tax compliant and have tax clearance. You must have filed your income tax returns and paid all the tax that you owe for any years where you were self-employed. Use Revenue Online Service (ROS) to submit your Form 11. Four year rule You may have signed your contract to buy a new build or drew down the first part of your mortgage for a self build between 1 January and 31 March 2018. If so, you may select either the:

• year of purchase to be the actual year you bought or built your home
• previous year provided you make your application before 31 May 2019.

This will allow you to select the four year period which is of most benefit to you. For example, if your contract or draw-down date is 2 February 2019, you may choose whether that took place in either 2018 or 2019. If you choose 2018, this will allow you to use your Income Tax and DIRT for the four years from 2014 to 2017. If you choose 2019, you can use the years from 2015 to 2018. [/su_spoiler] [su_spoiler title=”How do you apply for Help to Buy (HTB)?” open=”no” style=”default” icon=”plus” anchor=”” class=””] Use my Account or Revenue Online Service (ROS) to apply for HTB online.  There are two stages to the online process:

• the application stage
• the claim stage.

Application stage You can apply as an individual, or part of a group that is buying or building a property. You must complete a declaration and select the years you want to use for a refund. If you are tax compliant, your application will be approved. You will be provided with an application number and a summary of the maximum amount you can claim. You will also be given a 6 digit access code separately through My Enquiries. Keep a safe note of both of these codes as you will need to provide them to your lender. If you are buying your home you will also need these codes for your qualifying contractor. If you are self-building you will need these codes for your solicitor. Your contractor or solicitor will require this information to verify what you have submitted. If you make a HTB application but have not yet made a claim, your application will expire on 31 December. You can then re-apply and make a new HTB application. Claim stage You can make your claim once you have either:

• signed the contract for your home
• drawn down the first part of the mortgage if you are self building.

Login to HTB through my Account or Revenue Online Service (ROS) and complete the following steps below. Step 1 Upload evidence of your mortgage and the following information about your application:

• if you are buying a home: a copy of the signed contract
• if you are building a home:
  • proof of the drawdown of the first part of the mortgage
  • A copy of the valuation report from your lender.

Step 2 You will be asked to confirm details about the:

• property
• purchase price
• date of completion
• mortgage
• amount of deposit already paid.

If you are applying with other people you will also need to confirm the portion of the refund to be refunded to each person. If you are self-building, you will need to provide the BIC and IBAN of the loan bank account. Once you have submitted your claim you will be provided with a claim reference. Please ensure that you have carefully checked all the information you input before you sign and submit the claim.  If any of the information you have provided is incorrect, you must:

• cancel your claim
• submit a new claim with the correct information

This must be done before you continue to step 3. Step 3 Once you have submitted your claim you should advise your developer or contractor (or solicitor if you are self-building). Provide them with your claim reference (issued to you after step 2) and access code (issued to you when you submitted your application). Before you receive any refund, the information you have provided will need to be verified by the:

• developer or contractor, in the case of a new build
• Solicitor acting on your behalf, in the case of a self-build.

The refund that you finally receive is limited to 5% of the purchase price of the house. This may mean that it is different to the maximum relief amount that you were given at application stage. [/su_spoiler] [su_spoiler title=”Can Revenue claw back a refund? ” open=”no” style=”default” icon=”plus” anchor=”” class=””] Revenue can claw back refunds if:

• you were not entitled to the refund
• you do not live in the property for a minimum of five years
• you did not finish the process to buy the property
• you did not finish building the property.

Revenue can claw back refunds from the contractor if:

• the property is not bought by you within two years from when the refund was made to the contractor
• Revenue has reasonable grounds to believe that the property will not be bought by you within that two-year period.

There is some flexibility around the two-year period. This can apply if Revenue is satisfied that the property is either:

• almost complete at the end of the two years
• likely to be completed within a reasonable time period.

Once the residence is built and bought by you, you are solely responsible for meeting the conditions for the HTB refund. The developer is no longer responsible after this point. [/su_spoiler] [/su_accordion]