The Irish Times view on the latest mortgage figures: the squeeze continues

The latest mortgage data from the banks is worthy of examination, given the importance of housing and signs that property prices may be topping out. It shows continued growth in the price being paid for houses and the mortgages being taken out to pay for them in the second half of last year. There are no signs of the kind of boom which got the State into so much trouble after 2008, but affordability is still under pressure for many. First-time buyers of new homes had average incomes of €90,000 last year across the State and over €100,000 in Dublin - and most will have required this to buy a property.

The average value of properties purchased by first-time buyers rose by €35,000 to €320,000 between 2020 and 2022, while the average value of mortgage loans for this group rose by €24,000 to €254,000, according to the data from the Banking and Payments Federation Ireland (BPFI). So buyers have some leeway if prices slip, before problems of negative equity appear. Central Bank lending rules are doing their job.

It would be good news, now, if house prices stabilised or drifted lower following the post-Covid surge, given the ongoing affordability challenges. Higher interest rates are having an impact though demand remains strong and supply is limited. In the second half of 2022, the scale of mortgage drawdowns by first-time buyers was the highest since 2007.

While household finances are much stronger than was the case in the run-up to the financial crash, the sharp increase in interest rates will put some borrowers in trouble. Banks need to be prepared to help households in difficulty.

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The figures show that average mortgage repayments for many are relatively modest – and so the case for financial help from the State for mortgage holders generally as interest rates rise is questionable. Other means of support for households under pressure would be more efficient.

Finally, the strong number of first-time buyers is encouraging – though State supports to them may have helped push up prices. And, of course, the challenge of increasing supply remains.