Surprise, surprise, new research tells us that first-timers are now less likely to save for their house purchases than ever before.
Apparently, the arrival of 100 per cent mortgages is persuading some would-be homeowners that waiting years to build up funds to cover a deposit has passed. In addition, according to the Irish Mortgage Corporation (IMC), many of today's prospective first-timers are in possession of Government-sponsored SSIAs that mean they have little capacity for other savings.
In other words, they are planning to buy property now with no help from savings, safe in the knowledge that an SSIA windfall will be heading their way in either 2006 and 2007.
IMC, a mortgage broker, has found that almost two-thirds of people currently planning their first home purchase have an SSIA. Within this group, about 55 per cent of account-holders claim to contribute €254 per month to the scheme.
A further 11 per cent of the 414 people surveyed contributed between €200 and €253 per month - a decent amount. Of the group, 22 per cent were under 25, a young property-buying age by anybody's standards.
There are, of course, two ways of looking at this buy-first-get-cash-windfall-later approach to buying a first property.
On one level, it is a highly responsible approach to a challenging aspect of financial life. These buyers are showing that they have developed the discipline to watch their money, to save and to budget - all necessary qualities for a homeowner.
On another level, however, it suggests that some buyers could be entering into property ownership without actually considering the long list of immediate non-mortgage expenses that go with it. It is all very well knowing that you will come into €15,000 when your SSIA matures in 2007, but how will this help you to pay your stamp duty bill (only on houses costing more than €317,500) or your furniture expenses now?
The 100 per cent homeloan will, after all, only cover the bare purchase price for the house or apartment.
The danger here is that our flexible and expensive friends - credit cards - will step into the breach that will exist until SSIAs mature.
Credit cards, with typical APRs of 16.9 per cent (compare these to the mortgage APRs in the accompanying table), make for very costly borrowing that could quickly eat into the gains an SSIA will deliver when it finally matures.
The question arises: is it dangerous to buy now because you think you will have the money later? Maybe seems to be the best answer, with the response always depending on individual circumstances.
IMC points out, for example, that not every individual will qualify for a 100 per cent loan, despite all the publicity. It will thus always be advisable to save as much as possible in advance of applying for a mortgage, just in case.
Additional findings from IMC's latest research show that about two-thirds of buyers are planning to purchase with a partner, thus easing the individual burden.
A similar proportion place no importance on proximity to schools or creches when seeking a home, a result which IMC says reflects the youthful nature of today's first-timers. The average age of the group is, after all, just 28.
