This publication is categorised as a CSO Frontier Series Output. Particular care must be taken when interpreting the statistics in this release as it may use new methods which are under development and/or data sources which may be incomplete, for example new administrative data sources.
The proportion of households with tracker rate mortgages who paid 20% or more of their gross household income to service their household mortgage debt almost doubled from 7.0% of households in the first half (H1) of 2022 to 13.3% in H1 2023.
The 20% of households with the lowest gross income (i.e. the first quintile) saw the largest growth in the median debt service to income ratio, rising from 32.0% of their household income in H1 of 2022 to 40.8% in H1 2023.
The median debt service to income ratio of households with tracker rate mortgages for the whole analysis period 2020 to 2023 fell continuously from 10.3% in the second half (H2) of 2020 to 9.4% in H1 2022, but rose to a ratio of 10.6% in H2 2022 and to 11.3% in H1 2023.
Households with tracker rate mortgages had the lowest median debt service to income ratio from 2020 to 2022 of any mortgage type, but in H1 2023 households with fixed-rate mortgages had a lower median debt service to income ratio.
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Statistician's Comment
The Central Statistics Office (CSO) has today (12 December 2023) released Household Mortgage Affordability Analysis 2020 - 2023.
Commenting on today’s publication, Brian Cahill, Statistician in the Income, Consumption and Wealth Division, said: “This Frontier Publication is an experimental analysis piece where new data sources are combined and analysed, using new methods, to provide timely and relevant information and insight to policy makers and society. This analysis provides insight on the impact changes to interest rates and household income have had on the affordability of servicing household mortgage debt. However, as with all data published as a Frontier Series, care must be taken when interpreting the data as methodologies may change.”
Commenting on the findings, Mr. Cahill said: “Our research found that households with tracker rate mortgages and the 20% of households with the lowest gross household income were most significantly impacted by interest rate changes in the second half (H2) of 2022 and the first half (H1) of 2023.
Identifying the median debt service to income ratio involves ranking each household (with a mortgage on the household’s main residence) from lowest to highest based on the proportion of their gross household income required to service their monthly mortgage payment. We then select the households with the mid-point or median value.
The median debt service to income ratio of the 20% of households with the lowest gross income (i.e. the first quintile) saw the largest increase in the period, rising from 32.0% in H1 2022 to 38.0% in H2 2022 and 40.8% in H1 2023. In contrast the 20% of households with the highest gross income (i.e. the fifth quintile) saw their median debt service to income ratio grow by the least, from 9.0% in H1 2022 to 9.2% in H2 2022 and remaining unchanged into H1 2023.
Households with tracker rate mortgages saw the largest upturn in median debt service to income ratio which rose from 9.2% in H1 2022 to 10.0% in H2 2022 and 10.5% in H1 2023.
Households with tracker rate mortgages had the lowest median debt service to income ratio from 2020 to 2022, but this changed in H1 2023, when households with fixed-rate mortgages had the lowest ratio.
The proportion of households with tracker rate mortgages who paid 15% or more of their gross household income to service their household mortgage debt went up by 10 percentage points from 16.4% in H1 2022 to 26.4% in H1 2023.”