The index also shows that affordability for first time buyers continues to improve, and that this trend is set to continue over the coming months.
The EBS/DKM Affordability Index is an indication of a first time buyer couple's mortgage-paying commitments in the early years, on the presumption that each of them is on average earnings, buying the "average" new house and that their mortgage is worth 90% of the value of their property.
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The Index takes into account changes in mortgage rates, changes in the level of mortgage interest relief, increases in average earnings and any other economic or external factor that impact on overall affordability.
The index found that the average working couple buying their first home would spend 22% of their net income on their mortgage repayments today compared with 23% at the end of last year, and 26.4% at the end of 2006. This improvement represents a reduction in average monthly mortgage repayments of €137 between December 2006 and March 2008.
The continued improvement in buyer affordability is due to continued decreases in house prices and the introduction of new mortgage interest relief bands in Budget 2008.
Dara Deering, Director of Membership Business, EBS Building Society said: "We expect affordability to improve further for first-time buyers this year on the back of slowing house prices and possible decreases in mortgage interest rates - we expect that during 2008, more than likely the latter half of the year, that the ECB will reduce rates albeit it is difficult to predict by how much.
"It was in the context of these market conditions that we thought it relevant to ask DKM Economic Consultants to consider the benefits to the average first-time buying couple of renting versus buying."
(VB/JM)
