First Time Buyer Deposit

Based on the BOI figures [1], the average FTB contributed a deposit of 23% last year. I can understand the logic between switching between a 10% and 20% deposit given the lower rates, but why would anyone contribute more initially? Surely as a FTB you’d be better to keep the extra cash for fixing up the inevitable problems in the new property?

You can always dump it into the mortgage afterwards if you don’t need it.

[1] rte.ie/news/2013/0118/over-a … iness.html

Don’t know about BOI but with AIB the variable rate is 0.5% lower for <80%

Hmmm bought recently and had a LTV of about 66%. Left myself pretty close to broke with this which was a mistake in fairness, keeping €10,000 spare and having a slightly higher LTV would have been a more sensible approach in hindsight…

Look at the stats another way your average FRB is not borrowing 90%, if they were too and to push their borrowing to the max we could see big price jumps.

153k / 77 * 23 = 45k deposit if you use that as a 10% deposit you can spend upto 450 on a house!

They must have learned something out of all this.

I think they should have a minimum deposit of 20% anyway, I think this could help prevent credit based bubbles.

Agreed. A 10% deposit is far too small.

And from what I’ve heard on the grapevine, banks may officially be saying you need just 10% min but in reality, those who actually get a mortgage these days have over 20% min.

That’s the truth of it. I doubt any one is getting a mortgage with much less than a 20% deposit with a large minority having a much greater % deposit. If the average punter could get away with a smaller deposit they would.

That is far from reality. AIB and BOI are lending with 8 to 10% deposits.
To be honest I don’t believe that depriving the market of credit really solves all the problems.

Your doubts are unfounded. A couple close to us recently spent over half a mill @90% LTV, despite one of them having big negative equity on an apartment. It’s still about affordability.

I would have thought it would lead to less risk of a bubble because demand for property would be restraint by a minimum deposit, and that demand couldn’t suddenly increase at the first sign that prices are going up like in the last boom. If prices started rising people with no savings could not go down to the bank and take out 100% mortgage before they ‘‘miss the boat’’ which would add to a speculated bubble based on easy credit.

It’s quite simple, it’s all down to leverage.

Think of the LTV as a lever. The smaller the lever the less lifting power it has.

Giving credit to someone just because this person has a 20% deposit does not mean that this person couldn’t default in less than a year. It should all be about affordability and the deposit should just be a leverage dealing with the banks.

Not really - a bigger deposit means less projected loss for the banks and less risk, the affordability factor is still assessed on the actual mortgage given.

Banks looking for bigger deposits to me, means that they foresee further house price falls - the bigger deposit cushions them from these falls.