Those seeking to buy their first home will be eligible for a refund of their Deposit Interest Retention Tax (Dirt) on savings used to purchase their property. Refunds on Dirt will apply from today and run until the end of 2017 for savings up a maximum of 20 per cent of the purchase price.

This initiative comes at a time when the Central Bank has proposed that banks should only approve mortgages up to 80 per cent of the value of the property being purchased from January 1st.

First home

“As a result, first-time buyers will be able to save for their first home and retain 100 per cent of the interest that they earn on their savings,” Minister for Finance

Michael Noonan

said yesterday.” I would expect that the banks will introduce specific savings products to support this new initiative.”

A spokesman for the Banking & Payments Federation Ireland welcomed the initiative but said the financial benefit to first time buyers would be "in the hundreds [of euro] rather than thousands" given current low interest rates.

For those seeking to buy in Dublin, where a deposit of more than €50,000 could be required, this would only be a “small contribution in the overall context of things for first-time buyers”, he added.