Banks have launched an aggressive price-war for first-time buyers in a move experts say could kick-start the stagnant mortgage market.
Lenders are attempting to lure first-time buyers back into the market by slashing the interest rates on mortgages for new purchasers.
Halifax threw down the gauntlet yesterday when it cut the rate on its first-time buyer mortgage to just 3.20pc – lower than the European Central Bank rate of 3.25pc.
The Scottish bank said it had set aside €100m to fund the move, but would allocate more money if demand was strong.
Based on an average first-time buyer mortgage of €250,000, around 400 new buyers would benefit from the new rate.
The new 3.2pc mortgage is fixed for two years and compares with typical rates of 5pc in the market from other lenders.
Last week, AIB shook up the market for first-time buyer mortgages by offering a one-year fixed rate of 3.25pc – the same as the European Central Bank rate. Halifax will lend up to 90pc of the value of homes being bought, with AIB lending up to 92pc of the value of the house being mortgaged.
Mortgage market experts said the moves by Halifax and AIB were likely to tempt new buyers back into the market.
Do they really expect 1st time buyers to re- enter the market? I think the biggest factor now in people not buying house is the fear of unemployment- people are being let go in their droves.
Is this for real or just more “were still open for business” spin?
Is “up to 90%” on a par with typical “up to 70% off” sales, 10,000 items in stock, 9,995 at 5% off, remaining 5 at 70% off.
How many applicants (assuming thereare still idiots out there trying to “get on the ladder”) will qualify for 95% mortgages, and even for those that do, presumably that is 95% of the bank’s valuation, not the vendor’s.
(1) Job uncertainty is removed.
(2) I can see value in the market.
(3) Prices stop dropping, or the rate of decrease is very low. Still fearful of negative equity.
Interest rates will always go up or down, and I cannot fix for the full term. They are low now, would probably fix, if they went up when it came time to buy, I would take a gamble on variable.
400 x 250k mortgages? Will hardly shift a single property in the entire city of Dublin.
I also notice 6 replies to this post and no outrage (as might have been seen on this site a year ago). Now, everybody knows this gimmicky nonsense will make bugger-all difference to the morkesh.
Hang on a second is this not what got us into this mess in the first place
Bad lending by the banks!
The government is backing AIB not sure about HBOS
That backing is allowing them to offer cut rate mortgages to FTB’s who could find themselves in negative equity and out of a job.
I know when we joined the euro our central bank lost interest rate control but I thought they still set the rules of business along with the financial regulator.
That’s taking risks with taxpayers money what next bank investing on buying scratch cards
Maybe AIB and HOBS are more exposed to developers than we think and they have to do something to get the ball moving. Does this cut rate apply to new builds only ???
Now, where have we seen those low two year teaser rates adjusting later to higher variable rates before … and all the problems they caused … no, don’t tell them, they’ll figure it out for themselves …
Whatever about people who bought during the boom, and really believed property only goes up, they’re not making any more, Ireland is different. If ANYONE gets in over their head now, buys a house they can’t afford, borrows too much. Then they deserve everything that happens, and no sympathy.
It is a shame that after everything that’s happened, RTE, the newspapers etc will still give so called “experts” air time to encourage people to buy into a falling market, and won’t question anything those so called experts say. Or ask them about things they’ve said in the past.
