Affordability better for first time buyers
Tuesday, 4 November 2008First time buyers are spending less on monthly mortgage repayments. A new affordability survey says the average working couple is using around 20% of their net income to pay back home loans, compared to 26% two years ago.
When falling prices and changes to interest rates are taken into account, the EBS/DKM report estimates monthly repayments for first time purchasers are now €275 lower than they were in December 2006.
The index shows that affordability for first time buyers continues to improve and that this trend is set to continue over the coming months. It notes that house prices are currently in trend with those recorded in August 2005, with the average first time buyer home cost €239,398 in September.
Annette Hughes, from DKM Economic Consultants, says that Budget 2009 has resulted in a slight improvement in the circumstances of the typical first time buyer couple.
She says that while the new income levy is estimated to reduce the average first-time buyers disposable income by €404 a year, after the increase in the standard tax band, the increase in mortgage interest relief - now available at 25% - will reduce mortgage repayments by €572 a year from next year. This means that a first-time buyer couple is better off by €168 a year.
