Comment: As part of an initiative to kick start the construction industry, the Government has announced that they intend to bring in a new mortgage package for First Time Buyers. The details of this scheme will not be announced until later in the year, however press reports have indicated that it could operate as follows:-
- Mortgages of 95% would be provided to First Time Buyers only, who are purchasing new houses. A portion of the mortgage will be guaranteed by the state, which will allow banks to give out a large number of loans on a higher loan to value ratio.
- To ensure that this scheme does not create a housing bubble, there is likely to be a cap on the price of the houses which will be financed.
Recent surveys in relation to rents and the owner occupier ration in Ireland, has suggested that a greater number of people are renting rather than buying at present. This has led to problems in the rental market and any scheme that will allow people to purchase their own homes, should help both markets. In addition the obvious alternative benefit will be the creation of a large number of new construction jobs.
As with anything announced by Government, the devil will be in the detail and we will have to wait until later on in the year to see how the scheme will work.