Ireland Financial News – Mortgages & Banking

A survey by property website MyHome.ie indicates that two out of three intending first-time buyers say they plan to buy a property in the next year.

The survey also finds that 78% of first-time buyers now have the funds required to pay a deposit, which is up 20% from last September.

A similar number have either received or are seeking mortgage approval.

In his analysis of the results, independent economist Paul Murgatroyd, said first-time buyers clearly do not expect market and economic conditions to deteriorate significantly within the next 12 months.

Managing Director of MyHome.ie Angela Keegan said: ‘It is clear that Dublin will be the first market to see increased activity as 64% of first-time buyers wish to buy in the capital.

‘A further 13% are focused on purchasing in the traditional commuter counties of Meath, Wicklow and Kildare.’

However, in an opinion piece in today’s Irish Independent, economist David McWilliams argues that buying a house now makes no economic, financial or social sense, as he believes that houses are still substantially overvalued.

The latest report from the Central Bank says the Irish economy is likely to start growing again in the second half of 2010, but only at a ‘modest’ pace.

Its quarterly bulletin warns, however, that lower incomes and increased unemployment are likely to continue to hold back consumer spending.

It says there are signs that the economy is stabilising, but it warns that it will be 2011 before growth is strong enough to start bringing unemployment down.

It also says the timing and strength of a recovery very much depends on the performance of the worldwide economy, which will influence demand for Irish exports.

The Central Bank praises the Government’s measures taken so far to deal with the public finances, but warns that any ‘slippage’ from these would damage confidence.

It also urges the Government to give greater detail on how it plans to cut the budget deficit over the next few years.

The report refers to concerns about home owners struggling to pay their mortgages, saying any measures to help them should not

The Bank of Ireland and the EBS have announced they are to increase their standard variable rates for mortgage holders.

Bank of Ireland said it is raising its standard variable rate by 0.5%. The rate change is effective from 16 April.

Existing Bank of Ireland mortgage holders on standard variable rates will see repayments increase by between about €80 and €90 a month on a €300,000 mortgage.

Bank of Ireland said that while the increase is ‘regrettable’, it had no choice but to make the move.

The bank said that the cost of funding mortgages has become increasingly costly, as it is paying more to customers for deposits than it is receiving for mortgages. ‘As a result of this, our current mortgage pricing is unsustainable’, it stated.

AIB raised its variable mortgage interest rate by half a percentage point last month, following a similar move by Permanent TSB in February.

Announcing pre-tax losses of €1.8bn for the nine months to the end of last December, Bank of Ireland indicated last week that it planned to increase mortgage rates in the near future.

The move follows the transfer of the bank’s initial tranche of commercial property loans to the National Asset Management Agency, and comes a day after the European Central Bank announced it was keeping euro zone interest rates unchanged at 1%.

ICS Building Society, which is owned by Bank of Ireland, also announced interest rate increases across their variable rate mortgages. The changes are also effective from 16 April.

Meanwhile, the EBS has said that it will increase its standard variable rate by 0.6% from 1 May.

The building society said the current rate was no longer sustainable and that the increase would help meet the cost of funds from retail, corporate and wholesale markets.

The Chief Executive of the Consumers’ Association of Ireland has said that Bank of Ireland’s decision ‘beggars belief’.

Dermot Jewell said consumers would find the bank’s announcement ‘upsetting and sickening’ because of the role taxpayers had played in bailing out the banks.

Mr Jewell has predicted that the economy will suffer if the banks continued to raise their rates.

Property website Daft.ie says the asking prices for houses have fallen by 3.4% so far this year, which is the smallest quarterly fall in almost two years.

According to Daft, the national average asking price last month was €234,000, a total of €120,000 or 33% below the peak in 2007.

In Galway, prices fell by over 8% in the first three months of the year, while in Dublin, Wicklow, Waterford and Cork the falls were more in line with the average of 3.4%.

It now takes on average ten months to sell a house.

Price falls in early 2010 were largest in Dublin’s commuter counties, Galway city and north Co Dublin.

The report says that prices in Louth have seen some of the largest falls in the last three years, with the typical property now €200,000.

Daft says that while prices continue to fall and the total number of houses on the market is high, there is a steady decrease in the number of houses on the market.