First-time Homebuyers Forced to Borrow More Due to Price Surge

Rising house prices are putting pressure on first-time homebuyers, who are now borrowing thousands more to secure a home. Find out more about the current housing market trends.

Rising house prices are putting pressure on first-time homebuyers as they are forced to borrow more in order to afford a home. Despite a decrease in the overall home-lending market, there has been an increase in the number of first-time homebuyers approved for a mortgage in January. According to the Banking and Payments Federation Ireland (BPFI), the average first-time buyer mortgage approval value has risen by €14,519 in the past year to €289,971. This increase comes as housing prices continue to rise, with the median price of a dwelling purchased in the 12 months leading up to December standing at €327,500, according to separate Central Statistics Office (CSO) figures.

In January, a total of 1,991 new homebuyers received approval from a lender for a mortgage, marking a nearly 5% increase from the same month a year ago. This surge in new-homebuyer approvals is the highest recorded since banks began tracking them in 2011, with new buyers now making up six out of every 10 mortgage approvals. Despite house prices surpassing Celtic Tiger levels, the numbers of first-time homebuyers obtaining approval to borrow have continued to rise.

The overall market saw a decline of almost 12% compared to the previous year, with a total of 3,262 mortgages approved in January. Of these approvals, first-time homebuyers accounted for 61%, while mover-purchasers made up 21%. However, there was a 17% decrease in the number of movers approved for a home loan in January due to a chronic shortage of second-hand homes available for purchase.

In terms of value, mortgages approved in January amounted to €919m, with first-time buyers securing €577m and mover-purchasers receiving €227m in borrowing. The value of mortgage approvals saw a significant increase of 15.1% in January, indicating a growing trend of borrowing activity among first-time homebuyers.

Despite the challenges posed by rising house prices and a competitive market, first-time homebuyers are persevering in their efforts to secure a mortgage and purchase a home. With interest rates on the rise, it remains to be seen how this trend will evolve in the coming months.