First-time buyers forced to borrow thousands of euro more to secure a home as house prices surge

There was an increase in the ­number of first-time buyers approved for a ­mortgage in January despite a fall in the overall home-lending market.

The average first-time buyer mortgage approval value has also risen by €14,519 in the past year to €289,971 as housing prices continue to rise, the ­Banking and Payments Federation Ireland (BPFI) said.

The median price of a dwelling ­purchased in the 12 months to last ­December was €327,500, separate Central Statistics Office (CSO) figures show.

A total of 1,991 new buyers got the go-ahead from a lender for a mortgage in January, up nearly 5pc on the numbers approved in the same month a year previously, the BPFI said. This is the highest number of new-buyer approvals since banks started recording them in 2011.

New buyers now account for six out of 10 mortgage approvals. The increase in the numbers of first-time buyers getting approval to borrow is despite house prices surging past Celtic Tiger levels.

In the year to December, prices were up 4.4pc across the country.

Estate agents expect prices to keep rising despite a slew of interest-rate rises in the past year-and-a-half.

First-time borrowing activity bucked the trend for the overall market, which saw a fall of almost 12pc when compared with a year previously, the lenders said.

A total of 3,262 mortgages were ­approved in January, with first-time buyers accounting for 61pc of the overall number of approvals. Mover-purchasers accounted for 680 approvals, or 21pc of the total, the lenders said.

A chronic shortage of second-hand homes to buy meant there was a 17pc fall in the number of movers approved for a home loan in January when ­compared with the same month a year earlier. Mortgages approved in January were valued at €919m.

First-time buyers accounted for €577m of this, with mover-purchasers getting approved for €227m in borrowing.

The value of mortgage approvals rose by 15.1pc.

BPFI chief economist Ali Ugur said the latest figures showed continued slowdown across almost all customer segments, with the exception of first-time buyer approvals. He said these continued to remain robust, increasing by 4.7pc year-on-year in volume to 1,991 and by 10.2pc in value to €577m.

“These are the highest January FTB [first-time buyer] volumes and values since the data series began in 2011,” he said. “The average FTB mortgage ­approval value has also risen by €14,519 over 12 months to €289,971.”

Mr Ugur said it was concerning to see continued decline in mover-purchaser approvals, which reached their lowest January volumes since 2016.

“Movers play an important role in housing by bringing second-hand homes to the market but in recent years we have seen a decline in the number of properties being advertised for sale and much of that second-hand supply has come from investors selling up.”

He said that traditionally, the focus was on the supply of newly built homes. But with demand for housing so strong, there was a need for the second-hand home supply to increase as well.