The average age of home mortgage borrowers continues to increase with the number of first-time buyers (FTBs) aged 30 or under more than halving in the last 16 years falling from 60% in 2004 to 27% in 2020. This is according to a new detailed mortgage report published today by Banking & Payments Federation Ireland (BPFI).
The report shows an overall recovery in the current mortgage market back to 2019 levels following Covid-19, looks at a range of factors including a regional breakdown of the market, the age profile of borrowers as well as a comparison of mortgage repayments by customer, property and region. Drawdowns for homeowners (FTBs and mover purchasers) rose by 23% year on year in H1 2021 to more than 14,000, similar to the level of drawdowns in H1 2019. FTBs accounted for 67.5% of drawdowns in H1 2021, while FTBs buying existing properties accounted for 47.4% of the total.
Examining the age profile of borrowers, the report shows how older borrowers are increasing their share of the mortgage market. Some 60% of FTBs were no more than 30 years old in 2004, according to the Department of Housing, Local Government & Heritage. Eight years later, that proportion had dropped to 42%, and fell further to 27% by 2020. Similarly, about one third of mover purchasers were no more than 35 years of age in 2012.
By 2020, that proportion had more than halved to 17%. The report explains how a number of factors may be driving the ageing of home buyers with major life events that have prompted household formation, especially marriage and having children, occurring later in life.
Looking at the regional breakdown of the mortgage market, Dublin leads the way with 31.3% of home purchase mortgages in the twelve months ending June 2021, while commuter counties Meath, Kildare and Wicklow each had at least 4% of the national market. Outside Dublin and the commuter belt, Cork is the largest single market with 11.7% of mortgages, followed by Galway and Limerick with 4.8% and 3.8% each. The share of mover purchase mortgages varies significantly by region.
The report shows that in H1 2021 the median monthly mortgage repayment for FTBs was €841, more than €300 less than that for a mover purchaser. Dublin had the highest FTB median repayment of €1,107 followed by Wicklow (€1,054), Kildare (€976) and Meath (€942). The counties with the two biggest cities outside Dublin (Cork and Galway) had median repayments between €800 and €900. All other regions had median repayments of less than €730.
According to the report, “The most welcome finding, first of all, is that we can see a strong and full recovery in the mortgage market in H1 2021 following the extreme difficulties that were experienced last year with drawdown figures back to 2019 levels. However, the impact of Covid-19 restrictions continues to be felt on home loans for new properties, with existing houses accounting for close to 50% of the First Time Buyer Market, who in themselves account for a large majority of the overall mortgage market.”
The report concludes, “Looking forward however it’s encouraging to see from the latest CSO and Department of Housing figures that there were more than 24,000 housing starts and almost 14,000 completions in the first nine months of this year."