First-time buyers spend almost a third of their incomes on mortgage repayments, according to a new study today.
The new Affordability Index by EBS Building Society and DKM Economic Consultants reports that the average monthly repayments for couples buying their first home start at over €1,300, with some paying up to €1,700 in Dublin.
Mortgages nationally cost 27 per cent of earnings on average, with first-time buyers in Dublin spending 32 per cent of their income on repayments.
According to the index, 47,000 first time buyers are expected to buy a new home this year.
"First-time buyers make up a very important segment of the overall mortgage market and are expected to contribute €8.5 billion to the market this year," said Dara Deering, EBS head of mortgages.
"With rising property prices and interest rates, affordability is the key issue for many first time buyers." Ms Deering added. She warned house growth was impacting on affordability and that the EBS expect to see stronger-than-forecast growth this year.
Mortgage rates are on the upward path since December 2005, with further increases in the pipeline over the remainder of the year, noted EBS. It said these rises will be particularly difficult for couples who are first-time buyers.
Every 0.25 per cent increase in rates results in a rise of €14 per month or €168 a year for every €100,000 borrowed.
Combined increases in mortgage rates over the next 18 months could have a significant impact on housing affordability, according to Annette Hughes, director of DKM Economic Consultants.
