Continuing house price increases do not augur well for many aspiring buyers

As house prices continue to escalate - with the recent CSO House Price Index showing an annual increase in January of 16 per cent for properties outside Dublin and 13.3 per cent in Dublin - Brokers Ireland said the prospect of an increase in interest rates is a real worry for many existing and aspiring home buyers.

Rachel McGovern, Director of Financial Services at the organisation which represents 1,225 Broker firms said: "Already this week we’ve seen ICS move to increase its interest rate and the ECB has already flagged a likely increase before year end, which, if it occurs, will impact tracker mortgage rate holders.

"However Bank of Ireland went in the other direction this week by reducing some of its rates. Still, seeing such competition amongst lenders is very positive for consumers, however long it’s going to last.

"While house prices have surged, such competition has brought better mortgage products for consumers, with fixed rate repayments still at historically low rates and now available for periods of up to 30 years.

"However, it’s getting late for many aspiring house buyers, there is the real prospect now that the supply of homes may not be enough to dampen house prices sufficiently.

"Many have already been squeezed out by overly strict macroprudential mortgage rules introduced in early 2015 when house prices were much lower," she said.

Ms McGovern said there is a "forgotten generation" of aspiring home buyers for whom the lack of access to mortgage finance is becoming increasingly more burdensome.


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