Is saving for deposits affecting consumer spending?

It has been more than a year now since the Central Bank mortgage rules were introduced and despite its critics, it looks like they are here to stay.

Under the rules a first-time buyer must have a deposit of 10% of a property's value in order to secure a mortgage of up to €220,000. For amounts above that, the deposit must be up to 20% while it is also 20% for all non first-time buyers on the total amount.

The debate for and against this practice has been played out many times over the past 12 months and more but is it now also affecting the economy?

Businesses seem to think so with the need to save for deposits being blamed for retail sales dipping unexpectedly in March.

The latest figures, released yesterday, show that big-ticket items such as car sales, electricals and spending in department stores were all down. All in all headline retails sales were down 2.1pc in March.

The broad trend in consumer spending remains positive, however. Compared to a year ago the volume of sales was 5.2pc higher in March, and 3.1pc higher in value terms, but the pace of the increase has slowed.

Consumer spending was the big driver of economic growth last year, overtaking exports as the economic recovery filtered through to households, so any change will be closely watched.

One factor in the slowdown was car sales, which had been particularly strong in the first two months of the year, with an increase of 20pc, before tailing off last month.

In contrast, sales of furniture and lighting and clothing continued to grow by double-digit percentages in March.

Property firm Savills' director of research, John McCartney, told The Irish Independent that the Central Bank's tough mortgage lending rules may be impacting on spending habits.

“The lacklustre figures may reflect the fact that Irish households are continuing to pay down debt – outstanding bank loans were reduced by more than €3.5bn in the year to February. Also, families are saving more as first-time buyers and their parents put money away to fund the larger deposits that are now needed for home purchase,” he said.

Jobs growth means spending power should remain strong, he added.

• Have you had to cut back on spending to save for a deposit?


• Have you missed out on a property you wanted because you didn't already have a deposit in place?


• How difficult is it to save at present with interest rates falling?

Have your say below…

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