Negative equity proof mortgages to be introduced in autumn
NAMA will release residential and commercial properties in Limerick for sale in the autumn.
Welcoming NAMA’s introduction of a mortgage scheme, James Collins a lecturer in property valuation at Limerick Institute of Technology (LIT), says it will bring certainty to the property market.
The pilot scheme will see mortgages offered to potential buyers that will have a mechanism to shield them from negative equity.
“People have been delaying the purchase of property but this NAMA scheme may help kick-start movement – by creating a floor it indirectly helps to bring price certainty to the market,” says Mr Collins.
“Most buyers are concerned that the floor hasn’t been hit and haven’t been taking buying seriously but they will be encouraged if this NAMA move puts a visible floor on property prices”.
People who avail of these mortgages will still require a deposit of 10%, but will be shielded from negative equity of up to 20%.
Although some Limerick auctioneers are concerned that the scheme could create a sub-floor in the market, auctioneer Geraldine Leddin disagrees.
“It won’t have much of an impact on our primary market in Limerick. We find houses from €100,000 to €250,000 are moving – anything NAMA releases in Limerick will be above that in a higher spec.
“Over the €250,000 mark it’s dead in the water, some properties have dropped from €500,000/€600,000 down to €300,000/€400,000 which is excellent value if you can afford it”.
Pointing out that there are still buyers out there, just waiting to move, Mr Collins says:
“People are still getting married, still forming new households and they need to buy homes.”.
While some buyers are remaining “cagey,” others, according to Geraldine Leddin are getting tired of hanging around.
“We have a lot of young couples who had been waiting it out but they got tired and purchased”.
