They are the FTBs - first time buyers in their 20s , with 35-year mortgages and 100 per cent loans. Some have saved for a deposit but most are helped by their parents. And they have no worries about being deeply in debt - for now. They talk frankly to Rosita Boland
Today's first time buyers are the generation who have known nothing but cheap credit. However the Central Bank warned this week that the number of borrowers at risk from higher interest rates is growing. The cost of borrowing has risen 1.25 per cent since last December and will rise another 0.25 per cent next month. So how are first time buyers throughout the country coping?
WATERFORD
"We saw a huge increase in the FTB business once 100 per cent mortgages arrived," reports William Quinlan of Derek Walsh Auctioneers on Patrick Street in Waterford. Virtually all the first-timers buying through Walsh's, which has the Douglas Newman Good franchise, are now going for this maximum mortgage, with 35-year terms.
"They would go for 50 years if it was on offer," says Quinlan, the agency's sales director.
At this estate agency alone, the FTB market currently composes 65 per cent of business. There are now so many estate agents in Waterford that nobody in Walsh's is sure of their exact number, although when Quinlan takes a piece of paper and writes down all the names he can think of, he gets to 21 pretty quickly, surprising even his colleagues with the tally.
The radius covered by this office is about 30km, out to New Ross. The majority of their FTBs are in their mid- to late-20s, most of them couples, with single buyers divided equally between men and women, and a new and noticeably growing sector of friends and families buying together. In Waterford, the cheapest house currently on offer through Walsh's agency is a three-bed mid-terraced house in a council estate in Ballybeg, for €132,000. Three-beds in new estates and older townhouses range from €225,000 to €275,000.
What are FTBs here looking for? "Houses off plans or very newish houses, no more than a couple of years old. They don't want to do any work and want fully finished houses, already decorated to the highest standards," reports Quinlan.
"Even if a person has savings, they don't put them towards the deposit," explains Anita Cambie, mortgage manager. "Even though we explain it would reduce the term or amount of the loan, they say they want to use the money to furnish the house. They want everything perfect, and they want it right away. Solid wood floors, porcelain tiles, sleigh beds - I've heard it all."
In the past month, Cambie has received a large number of calls from FTBs looking for advice. They bought last year, and their first year of fixed-rate payments is at an end. "They are getting a big shock now, because their monthly payments are increasing a lot. Some of those people are definitely having problems, but interest rates don't seem to be worrying current buyers at all, they're so desperate to get on the property ladder."
Gail Conway (30), a broadcaster at local radio station Beat 102, and Pauline Doyle (26), a call centre analyst for AOL, both bought for the first time in the city this summer. Conway's two-bed is three years old and Doyle's two-bed, in the city centre, is 120 years old. Respectively, they paid €252,000 and €181,000 for the properties. Neither had any savings. Both Conway's and Doyle's parents gifted their daughters €100,000 towards the cost of their houses.
"Without help, I wouldn't have been able to buy," Conway says. "Well, I might have afforded something, but not in the location I wanted. I'm not worried about interest rates. If you worry too much, you'd never buy." With the parental gift, her repayments are €600 a month and she's taken out a 35-year mortgage. "I will pay back my parents over time."
Doyle's describes her gift as her inheritance. "My parents wanted me to have it now, so I could buy a house. They told me not to feel guilty about it. I know I'm very, very lucky. Not everyone has parents who can support them in this way. I couldn't have bought without their support, because the most the banks were offering me was €135,000, and most houses in Waterford are way more than that."
Doyle's house went to a bidding war and fetched €9,000 over the guide price. "I try not to think about that, that I paid so much more than it was on for. It upsets me. If there hadn't been another bidder, I probably would have got it for less than the guide price."
She deliberately went for a 30-year mortgage "because I found the idea of 35 years too long. Even so, I don't worry about interest rates at all, although I know I should, or that in theory the mortgage is 30 years. I think about it from month to month, not year to year. I could have gone down to 25 years, but I didn't want my mortgage repayments to affect my lifestyle." Doyle's current repayments are €480 a month.
Last week, husband and wife Malgorzata Gruber (26) and Piotr Starosciak (28) from Sanok, Poland, closed on a three-bed house in Waterford that they bought for €215,000. They have been living in Ireland for five years. Gruber, who worked as a waitress for four years, is currently in further education, and when her studies are completed, she will be trained to act as a liaison officer between newly-arrived Polish children and their teachers in schools throughout the country. Starosciak is a production supervisor in a factory. They plan to stay here for at least five more years.
During their five years so far in Ireland, they have saved €50,000. "We budgeted. We don't eat out, maybe a take-away once in a while. But we like eating Polish food at home - and the Polish culture is to go to other people's homes for entertainment, and take food there, so we do that rather than going to restaurants or pubs. All our Polish friends in Waterford are doing the same," says Gruber. "We will put half our savings into the mortgage and use the rest to buy furniture and do up the house," Starosciak explains.
Conway, who is also present, laughs in embarrassed admiration when she hears of their savings. "I had nothing saved. That's where the Irish people's mortgage savings went - into the pubs, restaurants and holidays," she says wryly. "Oh no, don't worry," Gruber assures her brightly. "It is because we are Polish. It is in our culture to save. For us, there is very little work at home, and when you do have it, you get paid from week to week, not monthly. So you have to save, because if you spend it all this week, you might not be earning anything next week." She looks across at Conway and smiles. "We know it is very hard for you Irish to save. It's not in your culture."
DUBLIN
Sherry FitzGerald has 11 offices in Dublin, and its Drumcondra branch is the busiest for FTBs. The area it covers includes Drumcondra, Glasnevin, Finglas, Whitehall and Santry. Among the properties on its books now is a one-bed apartment in Glasnevin for €360,000, and a two-bed townhouses in Finglas for €420,000. Their cheapest property is a one-bed apartment in Glasnevin for €300,000.
Colin Smyth, the branch manager, reports that while all their FTBs are trying to stay under the stamp-duty ceiling of €317,000, that most FTBs are now spending well up to €500,000. Its FTBs are divided equally between couples and singles, both men and women, and many of them spend several months looking, usually because they get outbid so often.
"We're pretty certain most people have parental help, or dig-outs from home, because they often bring parents along to viewings," Smyth explains. "To be honest, I don't know how people afford to buy for the first time in Dublin. But they are getting mortgage approval and we have to trust that the banks have stress-tested them properly in case of interest rates rising."
A survey by Halifax (the new name for the retail arm of the Bank of Scotland Ireland) in September found that key public sector workers, including nurses, teachers, firefighters and gardaí, were being priced out of the market in virtually all the State's biggest cities. In Dublin alone, homes were found to cost more than 13 times public sector average annual salaries.
Brigid Aylward (25), originally from Mullinavat in Co Kilkenny, is now working as a nurse in Our Lady's Hospital for Sick Children in Crumlin.
"To be honest, I didn't even bother looking at a single property in Dublin," she admits frankly. "The most I could get mortgage approval for was €179,000. That doesn't buy anything in Dublin."
In February, Aylward bought a three-bed terraced house off the plans in Waterford city for €185,000 on a 25-year mortgage. Her mother helped out with the deposit. The house will be finished by Christmas. "It's not ideal, buying so far away from where I live and work. But it's all I could afford, and some of my family live in Waterford."
Once she moves into the house, she plans to rent out one of the rooms, living there herself three nights a week, and renting a room for €10 a night in the nurses' accommodation in Crumlin the days she is working.
"I'd far prefer to be living in my own home all the time, but it's impossible. The thing is, I love my job, and I love working in the hospital in Crumlin. But at some point down the line, something will have to give. I couldn't keep living in two places. I will have to go and live where I can afford a house. It's so unfair. Everyone is aware that we need to have nurses, but how can we continue to work in Dublin when we can't afford to buy houses here? Of course it is an election issue for Dublin; it affects so many people here."
AYLWARD SAYS THAT if she was starting out in her career and was from Dublin, she would probably not have chosen nursing. "I would have to think: can I afford to live here? But because I'm not from Dublin, and I always saw myself as going home some day, to where my family are, I did choose it. There is a bigger and bigger distance between Dublin and the rest of the country. Dublin is almost like a different, separate country now. It has lost the run of itself."
Right at the other end of the scale of FTB in Dublin is quantity surveyor Gregg Santry (28). In January, he bought a five-bed house in Ranelagh for €680,000, on a 35-year mortgage. "More like €750,000 with stamp duty." The house was ex-council and had been bought by its tenants from the council, with the condition that if sold, it could be bought only by FTBs, thus excluding investors - although by any standards, it was a huge price for an FTB.
"It was possible because the bank gave me a loan equivalent to six times my salary. And I could also put in €130,000, which was what my dad gave me, including some of my own savings. Without that help, I couldn't have done it. I thought when I bought it would be a huge sense of relief, but I wouldn't say I've felt particularly better for buying. It doesn't keep me awake at night, but it's a fact of life that if you're going to be a home-owner in Dublin these days, you must accept you'll be in debt for a huge part of your life.
"If you're looking at my house in terms of value for money in its build, no, it's definitely not worth it. It could have been built for less than a fifth of what I bought it for. So is it worth five times more for location alone? It's worth something more, but definitely not that much more."
Accountant Emma Brady (29) closed on a three-bed house in Ballybough, Dublin 3, last month, which she bought for €425,000. She'll be living there with her boyfriend, Justin Fraser, but since he has recently arrived from Australia, and has to build up credit history here, the banks made it clear the mortgage would have to be in her name.
"I took out a 92 per cent mortgage over 35 years, and funded the deposit from my SSIA," she says. "I think it was a fair price, but my boyfriend is shocked. He doesn't like Ballybough at all, and feels the price is a rip-off. He keeps showing me mansions with swimming pools on the internet that the same money could have bought in Australia. The thing is, it's not like renting in Dublin is cheap either, so it's better to buy whatever you can afford. I'm an accountant; I have to be sensible with money.
"The location definitely was not my first choice; it's near a fairly dodgy area. I'd prefer to have bought in Clontarf by the sea! But you have to start somewhere. I think people want the best of everything straight away now, and have no patience. We have so much personal debt, and we've got so used to it. It's all about showing people what you have now - whether it's a house with everything new in it, a car or a ridiculous wedding.
"I don't know why we're so obsessed with property; it's not healthy. I think for parents now, it's not just about marrying your children off any more, you also want to see them with a house - which the parents are willing to help fund."
CASTLEBAR
Barney Kiernan, whose auctioneer's office is on Linenhall Street, was the fifth estate agent to open in Castlebar, in 1996. There are now 12 agencies in the town. One trend he has noticed in the first-time buyer (FTB) market in the last three years is that "virtually nobody saves their deposit any more. It's all gifts from family. And if it's a couple buying, the money comes from both sides." The other thing he has noticed is that, while in 2003, 90 per cent of his FTBs were couples, now 70 per cent of them are single buyers, mainly women. Foreign nationals are also starting to buy in the area.
"Everyone wants the same kind of property - a three- to four-bed, semi-detached house within walking distance of the town. There are apartments going up now, but we have no interest in them from FTBs."
The cheapest house on offer through his agency is a three-bed terraced former local authority house, going for €165,000. Most of his FTBs can't go beyond €225,00, which will buy a three-bed semi in a modern estate. Although they are cheaper, he has found very few FTBs are interested in buying old houses in need of work and doing them up.
"First choice is a new build, every time, and the most popular houses are the showhouses. The previous generation wanted old cottages with character that they could do up. There's none of that now."
Up to four years ago, FTBs were taking out 20-year mortgages. Now 30 or 35 years is the norm. Kiernan admits he is baffled by how FTBs can afford to buy in Dublin "when people here are stretched to the hilt even though prices are lower".
At the other end of town, on Ellison Street, is Moran Auctioneers, the longest-established agency in Castlebar. Brian Moran's family have been selling property in Co Mayo for generations. In 1970, he took over the business from his father. "In the 1970s, we weren't advertising property for sale in local or national papers," he recalls. "We were advertising in the Irish Post in London, aiming at those people who had been working over there all their lives and wanted to come home. That market has totally disappeared now."
Like Kiernan, Moran sells properties within a 25km radius of the town. Ten years ago, Moran was selling three-bed houses for some £69,000 (€87,611). Today, four-bed semis in the town are going for €230,000.
Moran says 80 per cent of his FTBs are single, mostly women, in their late 20s. The rest are young couples. At present the cheapest house on their books is a three-bed semi, 10 minutes' walk from town, for €185,000. The highest his FTBs have gone to is €245,000 for a four-bed semi, but that was very unusual. Sites do sell, but planning permission is a problem, and he finds most FTBs want walk-in properties that require no work.
"First-time buyers don't have a problem in this town. We're giving the houses away," he says enthusiastically, and he sounds as if he believes this.
One potential FTB who does not agree with Moran's view that houses are being given away is Peter Hayden (26), who works in IT in Westport. He has been looking for a year, and in that time he has seen prices for three-bed semis in the town rise from €200,000 to €225,000.
In a year, he's looked at about 20 properties, and the prices are getting further out of his range. Although he is approved for a 100 per cent mortgage, the most the banks will offer him is €190,000. "And that's on condition that I rent out two rooms." The term of the loan will be 35 years, with repayments of between €1,000 and €1,200 a month, depending on what rate he eventually settles on when he finds a property.
Hayden, who's currently renting a house on his own, is looking for a three-bed semi in town. "Between the agents and the media, there's a good job being done of hyping up the market," he says ruefully. He did look at a house for €185,000, but it had been rented out to students and needed redecorating, which he didn't want to do, even though it was essentially a cosmetic job. "Put it like this - if it's shabby when I move in, it's going to stay shabby for a few years."
When he does find something, "there will definitely be a lifestyle change. There'll be a movement from the pub to drinking at home. I don't know how anyone buys anything in Dublin, and I'd certainly be fooling myself if I thought I could ever buy for the first time there."
Erica Forde (28) and Ruth McNamara (27), both single buyers, got the keys to their first houses last month. Forde's was built in 2003, a four-bed semi in the White Horse Lane estate in Castlebar. McNamara's is a three-bed in Turlough village, some 10km from the town. It was built two years ago and originally bought by an investor who never lived in it. "So all I had to do was walk in the door," she says.
Forde, a primary school teacher on contract, bought her house for €235,000, on a 100 per cent mortgage, with her mother acting as guarantor. McNamara, a secondary school teacher, paid €236,500 for her house. Her father funded "a significant amount" of her €25,000 deposit. "In fact, all of it," she admits. Both women have taken out 35-year mortgages.
Although Forde has made only one repayment so far, the rise in interest rates means her next monthly repayment will have increased from €1,040 to €1,190. McNamara's mortgage is fixed at €1,046 for three years.
"Relieved to finally have bought," is what both women say when asked how they feel about their purchases and three-and-a-half decade mortgages. Neither of them needs to take in tenants to help pay the mortgage, although Forde has a friend renting one room while looking for a house to buy.
"The property market is totally over-hyped," McNamara says. "I thought it wouldn't be possible to buy, after hearing all the hype about interest rates, but it was possible. I definitely had choices buying here; there was a selection of houses to choose from. But we are teachers, and I don't know how someone in Dublin on the same teacher's salary can buy anything."
They both consider they got value for money. "There [ were no] hidden costs - no painting to be done, no tiling, no renovations." McNamara's house was furnished, but she didn't like most of it and ended up buying more. "The novelty of the house wore off very quickly. I'm sick of buying things for the house, I want to buy something for me again now!"
They both see their 35-year mortgages as theoretical. "I never saw myself punching in the 35th year of that payment," Forde says. "Although I was shocked when I discovered that if I did take 35 years to pay it off, that my total repayments would be €400,000 on a €235,000 house. My mortgage won't affect my lifestyle. I liked my treats and I still do. I never wanted having a mortgage to be so hard I couldn't enjoy myself, or not have an annual holiday."
Many of their peers have also bought, but some of them have found it more difficult. "I knew people who pulled out their SSIA early so they could get the money to put it on a deposit for a house they were desperate to get," McNamara says. Then she adds: "People never used to ask each other if you had savings, but everyone is talking about SSIAs now. When did all that start?"
"Money is what is spinning everything," Forde says. "It's not just houses, it's cars. It's a new culture of projecting your wealth, and it's been so rapid we're not stopping to think about it. I was at a funeral the other day and it suddenly made me stop and think about what was important to me - my family."
CASTLEBAR
Barney Kiernan, whose auctioneer's office is on Linenhall Street, was the fifth estate agent to open in Castlebar, in 1996. There are now 12 agencies in the town. One trend he has noticed in the first-time buyer (FTB) market in the last three years is that "virtually nobody saves their deposit any more. It's all gifts from family. And if it's a couple buying, the money comes from both sides." The other thing he has noticed is that, while in 2003, 90 per cent of his FTBs were couples, now 70 per cent of them are single buyers, mainly women. Foreign nationals are also starting to buy in the area.
"Everyone wants the same kind of property - a three- to four-bed, semi-detached house within walking distance of the town. There are apartments going up now, but we have no interest in them from FTBs."
The cheapest house on offer through his agency is a three-bed terraced former local authority house, going for €165,000. Most of his FTBs can't go beyond €225,00, which will buy a three-bed semi in a modern estate. Although they are cheaper, he has found very few FTBs are interested in buying old houses in need of work and doing them up.
"First choice is a new build, every time, and the most popular houses are the showhouses. The previous generation wanted old cottages with character that they could do up. There's none of that now."
Up to four years ago, FTBs were taking out 20-year mortgages. Now 30 or 35 years is the norm. Kiernan admits he is baffled by how FTBs can afford to buy in Dublin "when people here are stretched to the hilt even though prices are lower".
At the other end of town, on Ellison Street, is Moran Auctioneers, the longest-established agency in Castlebar. Brian Moran's family have been selling property in Co Mayo for generations. In 1970, he took over the business from his father. "In the 1970s, we weren't advertising property for sale in local or national papers," he recalls. "We were advertising in the Irish Post in London, aiming at those people who had been working over there all their lives and wanted to come home. That market has totally disappeared now."
Like Kiernan, Moran sells properties within a 25km radius of the town. Ten years ago, Moran was selling three-bed houses for some £69,000 (€87,611). Today, four-bed semis in the town are going for €230,000.
Moran says 80 per cent of his FTBs are single, mostly women, in their late 20s. The rest are young couples. At present the cheapest house on their books is a three-bed semi, 10 minutes' walk from town, for €185,000. The highest his FTBs have gone to is €245,000 for a four-bed semi, but that was very unusual. Sites do sell, but planning permission is a problem, and he finds most FTBs want walk-in properties that require no work.
"First-time buyers don't have a problem in this town. We're giving the houses away," he says enthusiastically, and he sounds as if he believes this.
One potential FTB who does not agree with Moran's view that houses are being given away is Peter Hayden (26), who works in IT in Westport. He has been looking for a year, and in that time he has seen prices for three-bed semis in the town rise from €200,000 to €225,000.
In a year, he's looked at about 20 properties, and the prices are getting further out of his range. Although he is approved for a 100 per cent mortgage, the most the banks will offer him is €190,000. "And that's on condition that I rent out two rooms." The term of the loan will be 35 years, with repayments of between €1,000 and €1,200 a month, depending on what rate he eventually settles on when he finds a property.
Hayden, who's currently renting a house on his own, is looking for a three-bed semi in town. "Between the agents and the media, there's a good job being done of hyping up the market," he says ruefully. He did look at a house for €185,000, but it had been rented out to students and needed redecorating, which he didn't want to do, even though it was essentially a cosmetic job. "Put it like this - if it's shabby when I move in, it's going to stay shabby for a few years."
When he does find something, "there will definitely be a lifestyle change. There'll be a movement from the pub to drinking at home. I don't know how anyone buys anything in Dublin, and I'd certainly be fooling myself if I thought I could ever buy for the first time there."
Erica Forde (28) and Ruth McNamara (27), both single buyers, got the keys to their first houses last month. Forde's was built in 2003, a four-bed semi in the White Horse Lane estate in Castlebar. McNamara's is a three-bed in Turlough village, some 10km from the town. It was built two years ago and originally bought by an investor who never lived in it. "So all I had to do was walk in the door," she says.
Forde, a primary school teacher on contract, bought her house for €235,000, on a 100 per cent mortgage, with her mother acting as guarantor. McNamara, a secondary school teacher, paid €236,500 for her house. Her father funded "a significant amount" of her €25,000 deposit. "In fact, all of it," she admits. Both women have taken out 35-year mortgages.
Although Forde has made only one repayment so far, the rise in interest rates means her next monthly repayment will have increased from €1,040 to €1,190. McNamara's mortgage is fixed at €1,046 for three years.
"Relieved to finally have bought," is what both women say when asked how they feel about their purchases and three-and-a-half decade mortgages. Neither of them needs to take in tenants to help pay the mortgage, although Forde has a friend renting one room while looking for a house to buy.
"The property market is totally over-hyped," McNamara says. "I thought it wouldn't be possible to buy, after hearing all the hype about interest rates, but it was possible. I definitely had choices buying here; there was a selection of houses to choose from. But we are teachers, and I don't know how someone in Dublin on the same teacher's salary can buy anything."
They both consider they got value for money. "There [ were no] hidden costs - no painting to be done, no tiling, no renovations." McNamara's house was furnished, but she didn't like most of it and ended up buying more. "The novelty of the house wore off very quickly. I'm sick of buying things for the house, I want to buy something for me again now!"
They both see their 35-year mortgages as theoretical. "I never saw myself punching in the 35th year of that payment," Forde says. "Although I was shocked when I discovered that if I did take 35 years to pay it off, that my total repayments would be €400,000 on a €235,000 house. My mortgage won't affect my lifestyle. I liked my treats and I still do. I never wanted having a mortgage to be so hard I couldn't enjoy myself, or not have an annual holiday."
Many of their peers have also bought, but some of them have found it more difficult. "I knew people who pulled out their SSIA early so they could get the money to put it on a deposit for a house they were desperate to get," McNamara says. Then she adds: "People never used to ask each other if you had savings, but everyone is talking about SSIAs now. When did all that start?"
"Money is what is spinning everything," Forde says. "It's not just houses, it's cars. It's a new culture of projecting your wealth, and it's been so rapid we're not stopping to think about it. I was at a funeral the other day and it suddenly made me stop and think about what was important to me - my family."
The ABC of FTBs
First Active was the first financial institution to offer a 100 per cent mortgage in July 2005. It was soon followed by Ulster Bank, Bank of Ireland, Permanent TSB and Bank of Scotland (Ireland).
The average term of a first-time buyer's mortgage is now 35 years.
FTBs comprised 21 per cent of the entire mortgage market in the State during the first half of 2006, a sum worth €4 billion, according to the Irish Mortgage Council (IMC).
The average price of a house in Dublin is €420,000, according to the joint ESRI/Permanent TSB house price index for September 2005-2006. These figures, which are updated every month, found that outside Dublin, it was €266,000.
The IMC found that, for the first half of 2006, the average amount borrowed by FTBs countrywide was €227,000
While banks used to offer mortgages based on multiples of salary, they now use an "affordability" index. The limit for mortgages is based on repayments that average 35-45 per cent of monthly net income. "Stress-testing" is used to judge if monthly repayments can still be managed in the event of a 2 per cent rise in interest rates.
Now and then What first homes cost
WATERFORD
Gail Conway's two-bed in Waterford cost €252,000
Her parents bought a quarter of an acre in Co Westmeath for £800 (€1,015) iin 1973 and built a four-bed dormer bungalow for £4,500 (€5,713)
Pauline Doyle's two-bed in Waterford city cost €181,000
Her parents built a four-bed bungalow in Carlow for £10,000 (€12,697) in 1978
Malgorzata Gruber and Piotr Starosciak's Waterford three-bed cost €215,000
Their families lived in flats funded by the communist state in Sanok, Poland
DUBLIN
Emma Brady's three-bed in Ballybough, Dublin 3, cost €425,000
Her parents bought a four-bed in Malahide in 1975 for £11,200 (€14,221)
Gregg Santry's five-bed in Ranelagh, Dublin 6, cost €680,000 (around €750,000 with stamp duty)
His parents bought a five-bed detached house in Waterford city in 1968 for £29,000 (€36,822)
CASTLEBAR
Ruth McNamara's three-bed in Turlough, 10km outside Castlebar, cost €236,500
Her parents paid £6,000 (€7,618) for a three-bed in Swords, Co Dublin in 1973
Erica Forde's four-bed semi in Castlebar cost €235,000
Her parents paid £8,500 (€10,792) for a four-bed bungalow in Castlebar in 1976