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Mortgage Monitor

We have now collected five waves of data as part of our Mortgage Monitor, and following on from our January wave, we present our April wave based on March data. 

Constantly we hear insight from banks and institutions on the state of the mortgage market in Ireland, however we rarely hear from home buyers and they are the people that drive and shape market forces. Through this report, we capture those voices. 


Getting the alternate view on the housing market.

 

1 in 5 people have considered buying

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79% of Irish people are currently not engaged with the property market (down from 81% in January), 7% have left the market (up from 5% in January), while  the same amount of people (as in January) are currently looking to buy - 14% of the Irish population.

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Expectations of rent inflation

Similar to our January wave, those living in Leinster are more likely than the general population to believe that rents are going to increase nationally over the next year.

Those living in Dublin are less likely to expect an increase. This is possibly due to the Dublin market reaching a price peak - with rents at a high just 6% below the peak in 2007 according to Daft's recent market report.

When we ask people what percentage they believe rent prices will change by, Dublin rents continue to have the greatest expected increase.

While the expected increase has declined since January, it remains the area with the highest expectation and Ulster/Connaught is the area with the lowest increase rate, but there is no expectation that any area will have decreases.

Property Price Speculation

The downward trend is continuing for people’s expectations around house price increases. While there is still an expectation for house prices to increase, the proportion of people who think they will increase is dropping.
This may be due to the increased conversation around lending restrictions. 

While the majority still expect asking prices to increase there is a decline in this sentiment since January.

We can also see the mindset of a two tier economy forming with less people in Dublin believing that house prices are increasing compared to people in the rest of the country. 

We see the further decrease in house price increase sentiment when we look at by what % people expect these increases.

We see that from the last wave those in Dublin feel that house prices will increase only by 11% compared to 16% in the previous wave.

Munster is also beginning to show an upward trajectory in relation to the percentage increase.

 

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Mortgage Holders

Currently mortgage holders in Ireland who have a standard variable rate (SVR) mortgage are feeling slightly hard done by. They are paying more interest than their European counterparts and those with fixed rate mortgages. 

This has sparked debate among those in power about what to do for this group. 

While not an option to all borrowers, those who are in a position to move mortgages should look into their options to do so, the banks must be convinced that they are at risk of losing customers if they persist with SVR rates that are higher than what is available to customers in other banks.
— Michael Noonan Soundbite Newstalk, 7pm Evening Bulletin 16/04/15.

Is there a willingness to switch mortgage provider?

Sense of satisfaction with providers

Typically people like to complain about any institution they have to pay money to however we wanted to get a sense of peoples real satisfaction with their mortgage provider.  

Servicing a mortgage is such a long term commitment there may be a mild case of Stockholm syndrome or 'Satisficing' occurring, however we were surprised to see that most people are happy with their mortgage provider.

At least half of mortgage holdersare satisfied with their mortgage provider with the highest satisfaction score for KBC, 70% and the lowest against Bank Of Ireland.

Is switching inevitable?

For the people who weren't satisfied we wanted to see how likely they would be to switch. Taking all of the people who said they were dissatisfied with their provider , 30% said that they would be likely to switch. 

With Michael Noonan bringing the conversation to the fore on switching mortgage provider we expect dissatisfaction scores to increase along with those who are likely to switch. As this agenda is pushed by the Finance Minister - will consumers respond and shop around and will banks provide competitive offerings to encourage movement between providers?

Will Online Mortgages disrupt?

 

Gathering information and researching is a key stage on the journey to getting a mortgage. This research is being conducted both online and offline, with an increasing amount conducted online. 

We wondered 'how appealing  would it be for people to go through the full mortgage process online if there was an incentive offered?' Could a foreign bank with no bricks and mortar presence in Ireland set up online and offer lower interest rates? 

37% of people said that they would be interested in purchasing a mortgage online if rates were lower. Previously we saw the confusion Irish people have around interest rates so this could be a path into the market for an online or foreign bank.

Interestingly, younger people are most interested in purchasing a mortgage online with nearly half (47%) of under 35 year olds claiming they would consider the offer. 

Positivity

Compared to our last wave conducted in January it looks like the coverage of the new mortgage lending rules are having an impact. Previously 33% of people saw the 20% deposit rule as being beneficial while 38% now feel it's beneficial. Additionally in January 45% of people saw the limitation on borrowing 3.5 times your income as being beneficial while 50% now see it as being beneficial. 

In addition to this there is also some support for the maximum 80% loan to value ratio for those seeking a mortgage with 33% of people believing it will be good for the consumer

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