Girls just wanna buy property, it seems. Figures from IFG Mortgages released earlier this year showed that single mortgage applications by women had risen 30% in a year whereas those from single men had gone up by 1%.

“We certainly see slightly more women making single applications,” said Spencer Bolting of PrimaFinance.ie, a mortgage intermediary. “Most of our single male clients form joint applications with their girlfriends or fiancees rather than buying on their own.”

Unfortunately, six successive interest-rate rises by the ECB have hit the new property-buying woman, and more lecent IFG statistics indicate that the proportion of single mortgage applicants fell from 40% of all those seeking a mortgage to 35% in the third quarter of the year. With each rise in rates, lenders reduce the amount for which a mortgage applicant will be approved because the cost of servicing the loan rises.

“The number of single people borrowing is dropping now,” said Sotting. “In the past, when banks were calculating how much you could borrow, they tended to stress-test the rate. If you were applying for a tracker mortgage at 3.1% or a standard variable mortgage at 3.4%, you would have been stress-tested at rates of 2% above that. Now standard variable rates are between 4.5% and 4.75%, so there has been a big jump.”
Bolting said the number of inquiries from single people has remained steady, but, because of the reduced loan offers, the percentage of singletons succeeding in closing a property purchase has tailed off. Single people who want to get on to the properly ladder should not despair, however. Lenders are becoming increasingly flexible with the mortgage terms they offer and . there are alternatives to buying on your own that could make life easier.

Changes in lending
Surveys show that women are more likely to do their research before buying and are more single-minded in getting the place they want.

What women find now is that lenders are beginning to ease off on stress-testing. “As interest rates were static for so long and house prices were rising so rapidly, the banks took a prudent view,” said Bolting. “Now we’ve seen rates rise 1.5% with another increase likely in the next quarter, so the banks could argue now that there is less volatility in the market and there might not be as many sharp increases in interest rates in future.” Lenders have also become more willing to grant borrowers longer repayment terms, a trend that brings more young women into the scope of loan providers given their longer life expectancy.

The IFG mortgage index shows that the average repayment term increased notably from the third quarter of 2005 to the same period this year. This year, the number of applicants gelling a loan for more than 35 years rose from 5% to 7% and mere are even 40-year morlgages on offer. The calculations on which loan amounts are made are also changing. Lenders used to give loans based on multiples of three times salary. Now, women who are applying for mortgages are more likely to get 4.5 or five times their earnings.

Most lenders, however, now work out how much an applicant should get based on their net disposable income, which is sometimes called their debt-service ratio (DSR). This is the amount of money somebody has left each month after paying tax and servicing other loans. The top limit used to be 40% of net disposable income, but this is rising.

“Some applicanls are now getting 45% or 50%, depending on the strength of their application,” said Bolting. “If someone is an accountant or a solicitor, the lenders are more likely to give them 50%.”

Bring parents on board
Single people who find they cannot qualify for a sufficient home loan can look to their parents for help, either by asking them to act as a guarantor or by agreeing to a joint mortgage application. “Usually, the parent, or whoever the guarantor is, guarantees the shortfall on the loan,” said Bolting. “If you want E250,000 but only qualify for E210,000, the guarantee is for E40,000. “Most lenders would want to see that the outslanding mortgage would be within your grasp in five years’ time. For example, by then the loan might be E230,000, but you would qualify for E250,000 so you would no longer need a guarantor.”

He said that guarantees really only work for a manageable shortfall. Only Allied Irish Banks allows guarantees for larger proportions of loans, but it seeks some form of life assurance from the guarantor.

“If the guarantee is for E100,000, a life assurance policy must cover a proportion of it. As the parent is likely to be over 50, this policy could be expensive and the question will arise as to who pays for it,” he said. The other alternative is for a single person to apply jointly with their parents. By doing this, they should be able to borrow enough and still can have the deeds in their sole name.

Buy with friends or siblings
Single people can consider pooling their resources with a friend or sibling. “People have been getting their buying power up in recent years by buying with friends or siblings,” said Sarah Wellband of Rea, a mortgage intermediary.

“Buying together means they can get a three-bedroom property close to town, whereas if they were on their own, they might have to settle for a one- or two-bed at an hour’s commuting distance.” Security concerns can make this a good option for the singleton as it means they can buy in a safer area. Single women will also benefit from the type of property that they look to buy. Proximity to schools, for example, is not a pressing need.

Wellband says lenders have no problem lending to two friends buying together and are only concerned with the applicants’ ability to repay.’She adds, however, that they always treat the loan as a 50:50 arrangement, so if the borrowers want to arrange repayments on a different basis, they will have to have a separate agreement on the side.

She also advises friends to ensure they put a legal agreement in place setting out the ground rules and what will happen when one wants to sell up. She also suggests renting together for six months to be sure you are compatible housemates before committing to a mortgage.

Mortgage interest relief
Although the increase in the mortgage-interest relief ceiling for first-time buyers will not suddenly bring desirable properties within their reach, it will help.
According to Wellband, two people borrowing E300,000 at 4.75% could expect to pay E14,250 in interest in the first year of the loan. Up to last week, they would have received E133 per month in mortgage interest relief, but they will now receive E237. As each 0.25 quarter point increase in interest rates costs them another E62, the increased interest relief more than cancels out one rate rise.

Two people borrowing E375,000 at 4.75% would pay E17,812 in interest in year one, above the new threshold of E16,000. Up to now, they got the previous maximum mortgage interest relief of €133, but from now on they will get the new maximum relief of E267. As a quarter-point interest rate rise would cost them E78 extra a month, the increased tax relief nearly cancels out two rate rises for them. Wellband points out that this relief applies to anybody who bought a property for the first time within the past seven years, even if they have moved house in the interim period. They can continue to claim the higher mortgage interest relief until they go into their eighth year of property ownership.