SSIA funds 'more likely to be invested in property'

Owners of Special Savings Investment Accounts are more likely to use the savings to invest in property than use it for any other purpose, according to a new survey by the Irish Mortgage Corporation.

Some 28 per cent of 560 Irish Mortgage Corporation customers who responded to the survey said they planned to use some or all of their SSIA money to make a property investment. In this group, 19 per cent said they would invest in Irish property and 9 per cent said they would use the money to buy property overseas.

Holidays were next on SSIA-holders' list, with a quarter of respondents saying they would use some or all of their money to take a trip.

Another 21 per cent said they would use the money for home improvements.

Paying off credit card bills and buying a new car were each the choice of 18 per cent of the homeowners surveyed.

Some 16 per cent said they would pay down their mortgage, a drop from 27 per cent in a similar survey conducted by the mortgage broker last year. The firm said this might be because savers had given more thought to their spending and savings options.

But more people told the company that they intended to clear credit card debts than in the previous survey. Irish Mortgage Corporation hailed this as good financial sense, given the high interest rates charged on credit cards.

SSIAs are not destined to be a silver spoon for children, the company's survey suggests, with less than 2 per cent of respondents saying they would give part of their matured funds to their kids.

Someone who has contributed the maximum €254 a month permitted under the savings scheme for the full term of five years is on course to receive a windfall of around €20,000-€22,000, with the exact value depending on the financial institution providing the SSIA and whether the account is deposit-based or equity-linked.

This includes the Government's bonus of €1 for every €4 saved.

The first SSIAs mature on May 31st this year, but only a small percentage of people who opened their account when the scheme first opened in May 2001 will see their funds mature on that date.

The majority of SSIA accounts do not mature until mid-2007.

As a result, over a third of people told the Irish Mortgage Corporation that they were unsure about how they planned to spend their SSIA.