Interest rate hikes spooking homebuyers, report claims

Rising interest rates have spooked homebuyers, according to a new survey that shows most of them are seeking fixed-rate mortgages.

A study published on Tuesday by property website Myhome.ie, owned by The Irish Times, shows that the hikes in borrowing costs and supply fears are dragging on the property market.

Two out of three potential purchasers fear that rising interest rates will affect their ability to buy a home, 20 per cent more than in the company’s last survey in March.

“Interest rates appear to have spooked those looking to secure a mortgage,” said Myhome.ie, which adds that more than half are seeking terms of more than five years, while 75 per cent of them will look to secure a fixed home loan.

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While six in 10 of the 2,520 respondents had raised the finance to buy a home, just 24 per cent of them believed that there were enough of them on the market to ensure they could buy a suitable property.

[ Interest rates expected to stay at 4% throughout 2024 – survey ]

[ ECB holds interest rates after 10 successive hikes ]

Just 11 per cent of them were happy with the housing measures that Michael McGrath, Minister for Finance, announced in Budget 2024 earlier this month.

Almost nine out of 10 respondents argued that the Government could do more to aid the property market.

Myhome.ie warns that sentiment remains poor, with just 14 per cent of those surveyed saying that they believe the next year will be a good time to buy property.

Joanne Geary, managing director of Myhome.ie, said the survey shows that interest rate and supply fears had taken over from concerns about energy prices voiced in March.

She argued that it is not surprising to see sentiment worsen in light of rising interest rates and the housing supply squeeze.

“In short, there are too many prospective buyers battling over too few properties which are steadily costing more to finance. It’s not a reality that lends itself to positive sentiment,” added Ms Geary.

[ And the big winners in this unpredictable housing market are? Developers … again ]

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Recent Central Statistics Office figures showing property price growth slowing, particularly in Dublin, reflect the poor sentiment, she pointed out.

Ms Geary welcomed extensions and changes to the help to buy and first home schemes, as well as grants for vacant derelict homes and retrofitting.

However, she maintained that with most buyers hoping to power their homes with renewable energy, the Government should consider more affordable green initiatives, as respondents are so far not happy with its response to this challenge.