Trading-Up - A growing trend among today's homeowners according to Bank of Ireland

- Space, desire to live in better area and moving back 'home' are key drivers -

Bank of Ireland Mortgages today (Monday, 21st July) released figures showing a major increase in the value of mortgage lending to homeowners planning to trade-up. In the 12 months to June 2003, the amount borrowed by trading-up buyers was in excess of Eur400 million, representing an increase of over 200% in the past five years.

This figure backs up the theory that a 'trading-up phenomenon' is taking place in the Irish property market, reflecting the fact that first time buyers who could not afford to buy their preferred house over the past 10 years opted for a 'compromise' home until they could afford to up-grade or move into the area of their choice.

Trading-up loans account for 20% of lending activity by Bank of Ireland Mortgages, with an average loan of Eur261,000 in Dublin and Eur123,000 outside the capital. Taking in to account an average loan-to-value ratio of 60%, the figures suggests that in excess of Eur400,000 is the average price homeowners are paying for their second or subsequent homes in the Dublin area. By contrast, the average price people outside Dublin are paying for their trade-up home is Eur205,000.

An independent nationwide survey conducted by Behaviour and Attitudes on behalf of Bank of Ireland's mortgage division revealed that of all current homeowners, 25% have moved one or more times over their lifetime. The research shows that the average time a person will stay in their first home these days is significantly shorter than they would have done heretofore. Of those who traded-up, respondents aged over 50 indicated that they spent at least 10 years in their first home, whereas the survey shows that respondents under 50 are spending a shorter time in their first home (an average of 6 years).

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Commenting on the research, Olive Moran, Marketing Manager, Bank of Ireland Mortgages said: "At 20%, the trading-up segment represents a substantial portion of our business, showing that a significant and growing number of people are taking this option. However, our research also indicates that there are some very real barriers to moving up the property ladder and, for many people, trading up to their dream home is not so easy ".

In the survey, 46% of respondents said that house prices were the key barrier to trading up, 22% cited stamp duty and 11% felt supply or availability of their preferred home was the main impediment. Due to these barriers, some people are opting to release equity to extend their property or make home improvements. At Bank of Ireland, we have also seen a large increase in equity release lending - up 300% since 1998".

The research data also points to the recent trend in Irish society whereby people are looking to financially benefit from growth in the property market. The more frequently a person trades-up, the less likely they are to sell the property they are moving from. 80% of people who moved house from their first home sold their original property while only 60% of those who moved house for the second time sold their property, indicating that people have made a financial gain from their dealings on the property market.

Furthermore, of the 25% that traded-up, the most popular reason for the first move is space (36%) followed closely by the desire to live in a better area (14%), or to move back to the area where they grew up (13%). 12% wished to move closer to work with 11% citing the desire to live in a nicer home as their reason.

Reasons for moving home differed between the first, second and third moves. The key driver for the second move is to 'live in a better area'. In the third move, the key driver is to move back to where the homeowner originally grew up. The research also suggests that the drivers are rather different going forward than they were in the past. Growing in importance are issues such as living in a better area, living in a nicer home, moving outside the city and having a back garden.

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In response to the growing number of people wishing to trade up, Bank of Ireland Mortgages has developed a Trading-up Mortgage Package that incorporates a range of different features including, a Homeloan Tracker variable rate at 3.49% (3.5% APR), payment of the customer's indemnity bond fee, 3-months free home insurance, 6-months free mortgage repayment cover as well as 12-months free personal accident cover.

Bank of Ireland Mortgages also provides Bridging Finance to customers, who have exchanged contracts, at its home loan variable rate.

ENDS

21st July 2003

For reference:
Olive Moran
Marketing Manager
Bank of Ireland Group Mortgages
Tel: (01) 611 3525
Mobile: 086 6622333

Anne Mathews
Media Relations Manager
Group Corporate Communications
Tel: (01) 604 3836
Mobile: 087 246 0358