Galway, Ireland, October 13th 2008: With the most difficult budget in decades facing us today, it will be interesting to say the least to see what will happen with mortgages in Ireland.
While the recent half of one percent cut in mortgage interest rates was very welcome, the likely increase in personal income taxes along with predicted increases in a range of other taxes is likely to offset any benefit in reduced interest rates.
Both the residential and commercial property markets continue to fall dramatically, and there continues to be substantial reductions in the growth of mortgages in Ireland.
Only a year ago Brian Cowen was bringing us the following welcome news:
”In the Programme for Government, we signalled that the first time buyer – and recent purchasers – would benefit from further increases in the ceiling on mortgage interest relief.
”Today, I will honour the Government’s pledge by increasing the ceiling on mortgage interest relief for first time buyers by ?2,000 for a single person and ?4,000 for a married couple or widowed person to ?10,000 and ?20,000 respectively.
”This will increase the maximum monthly relief available by about ?33 and ?66 respectively, bringing it to ?166 per month for a single person and ?333 per month for a married couple or widowed person.
”These moves are appropriate in ensuring additional support for a hard pressed segment of the housing market and should provide the necessary direction and certainty.”
These decisions were made in the boom times of the Celtic Tiger and while many expected an economic crash or at the very least a “soft-landing”, few could have expected the sort of disastrous ecomomic perfect storm that has engulfed not jus the Irish economy, but the entire world economy.
One thing is certain, the news will be very different today, and few can see a substantial increase in the number of mortgages in Ireland being taken out in the near future. Indeed, the general trends show that lending for mortgages in Ireland will continue to decrease over at least the short term, and could even continue to decrease for another 12 months, with many viewing it as an even longer range problem.
It will be interesting to see how the Minister decides to treat the different parties involved in the property and mortgage markets. While the general populace resents the amount of money made by property developers during the boom times and would be against giving them any further opportunties to make their fortunes, there must also be a realisation that the construction industry needs to get going again in order to minimise any further destruction to the number of those employed in Ireland.
Similarly, first time buyers will need to be encouraged to come back to the market. However, at a time when unemployment is on the increase, property prices are still falling, stock markets are in roller coaster mode, and taxes are being increased it will take a significant amount of work to encourage the first time buyers back into the market.
Michael Kelly is Managing Director of Mortgage Ireland Marketing Company Ridge Online Marketing. Ridge Online Marketing is focused on helping companies improve their online marketing visibility and specialises in mortgages, insurance and pensions in Ireland. Contact: Michael Kelly at mkelly@ridgebusiness.com. Further information www.mortgage-broker-ireland.com
