This time last year, there was still much fear afoot about a phenomenon that had been unknown to the Irish homebuyer for quite some time — increasing interest  rates. 

After a series of increases between autumn 2022 and 2023, there’s now little to show on this front because interest rates have finally begun to come down.

 A decrease in June from the European Central Bank has just been followed by a new cut in its base rates and it’s now only a matter of time before we see these new lower rates reflected in mortgage interest rates in Ireland. 

Analysts are not predicting any great impact on the marketplace in the immediate future, with inflation still proving sticky, but interest rates coming down is a positive for the mortgage market, making the prospect of lower mortgage interest rates look increasingly likely over the coming year.

“On a consumer level, we’ve seen a big uptake in sales,” confirms Paul Hannon, Director of Sherry Fitzgerald New Homes in Cork.  “And that’s because of an increase in supply. We’ve seen encouraging signs of improvement.” 

 While the Help To Buy Scheme has been used for a number of years, the effect of the First Home Scheme was something of slow burner. It’s the Government’s shared equity scheme — a resurrection of what was available in Ireland a few decades ago whereby the State steps in to provide an additional cheap source of finance to bridge the gap between what somebody can and cannot afford to buy. When it was first introduced in July 2022, it was a new concept for the Irish 21st century first-time buyer and it has taken a number of months for its use to flourish.

For those earning €60,000 for example, they can borrow a maximum of €240,000 (4 x times their salary) and then use the €75,000 equity available from the Government through the First Homes Scheme to bring their spending power up to €315,000. With the addition of the Help To Buy Scheme, their ability to purchase a new home gives them more scope again.

“The incentives that are there in the First Homes Scheme and the Help To Buy Scheme are definitely having their effect in allowing people to buy houses,” says Paul Hannon, Director of Sherry Fitzgerald New Homes in Cork. 

“One very positive aspect of that is that we’re seeing more and more single people buying houses. That’s definitely up — we would have seen very few single people in a position to buy a home up until the introduction of the First Home Scheme.” 

There isn’t anything ambiguous about the First Home Scheme, so why has the uptake been so low up to now?

“I think that it takes people a bit of time to drill down into the detail of how a new scheme like that works,” says Paul Hannon. “It takes some time to settle and I think that people are beginning to understand it that bit better now. Up to the end of July of this year, there were 24,000 applications for the Help To Buy Scheme but only 5,000 of them were taken up, so that just shows the pent-up demand that’s there.”  

 “The First Homes Scheme is obviously going to be extended,” says CEO of IPAV Pat Davitt. “But we’d be anxious that it would continue to be extended further because it’s very important for people to be able to get on the market. Now, the average starter home price is about €350,000. It’s a lot of money.

“It’s a very important part of the whole process now for the First Time Buyer. There are about 2,000 homes at the moment that have been bought under that scheme, which is a large amount of housing.” 

 “We’re seeing that it’s definitely becoming more and more utilised,” says Elizabeth Hegarty, Associate Director at Savills New Homes in Cork, “which is great. The uptake had been slow on it and I actually think that that was down to awareness about it — people just weren’t aware of what was available to them. Now, I think, the New Home Buyer is more savvy and fully aware of all the bits and pieces that go into buying a new home.”