A new index shows that first time buyer couples nationally are spending an average 27% of their income on their mortgage repayments.
According to the new Affordability Index from EBS Building Society and DKM Economic Consultants, those in Dublin are spending 32% of their income. These figures compare to 24% nationwide and 29% in the Dublin area this time last year.
The Affordability Index will be published every three months and tracks levels of affordability for first time buyers. It will allow buyers and lenders to monitor the level of debt that first time buyers are taking on.
The new index shows that average net monthly repayments are over €1,300 for first time buyer couples nationwide and almost €1,700 for couples buying in Dublin.
Trends over the past ten years show a major deterioration in housing affordability for first time buyers. Since 1996 house prices have increased threefold nationally and almost fourfold in the Dublin region.
With mortgage interest rates now on an upward path and with further increases likely, the new index also demonstrates the adverse impact on net mortgage repayments.
'While the amount of any individual rate increase may not impact significantly on borrowers, combined increases in mortgage rates over the next 18 months could have a significant impact on housing affordability,' commented Annette Hughes, Director of DKM Economic Consultants.
'Future affordability should be a key factor in the choice of a mortgage and lenders need to take a responsible approach to affordability and encourage consumers to consider the impact of possible interest rate rises in the future,' said Dara Deering, Head of Mortgages EBS.
It is expected that 47,000 first time buyers will take out a mortgage this year with the average price nationally at €292,000 and €388,000 in Dublin.
