Nearly 8,000 house hunters, who rushed to secure mortgage approval in the weeks before the strict new Central Bank deposit rules came into force, are in a race against time to buy houses and apartments before the summer.

Borrowers are facing a "use it or lose it" dilemma because most mortgage approvals lapse after just six months. Experts fear the rush to buy could lead to a short-term spike in prices, especially in Dublin where supply is short, and owner occupiers will be competing with professional investors lured back into the market by improved yields from rents.

Those who want to get on the property ladder, who don't purchase before mortgage approval runs out, will have to start again - this time, subject to the strict regime that requires a 20pc deposit, €60,000 on a €300,000 house. First-time buyers have to find 10pc deposit for the first €220,000 of the purchase price and 20pc on any balance thereafter.

Central Bank Governor Patrick Honohan, in a consultation document, indicated on October 7 that tougher deposit requirements were on the way which spooked those hoping to buy a place of their own. But the legislation only came into force four months later on February 9.

According to official figures compiled by the Banking & Payments Federation Ireland, there was an increase in mortgage approvals in the last three months of the year compared with the previous quarter.

From October 1 to the end of December, there were 2,780 mortgages approved on average each month.

Of these, 2,564 approvals each month were to purchase a house - a total of 7,692 mortgage approvals over the quarter.

The total value of house loans approved in the last three months of the year came to more than €1.4 billion.

Those approvals, depending on the date they were granted, will lapse some time between the end of March and the end of June.

Savills director of research, John McCartney, told the Sunday Independent: "There was a period of four months when people knew that the deposit rules were going to happen before it actually passed into legislation. First-time buyers also knew it was happening and everyone had a chance to get their ducks in a row."

"They did what they had to do before the Central Bank rules kicked in and got mortgage approval. There is a provison in the Central Bank regulations that anyone who has a written mortgage approval underwritten by a full credit assessment would not be subject to the deposit rules," he said.

"The trouble is that those mortgage approvals don't last forever. In most cases, they last six months. I am hearing from [estate] agency people on the ground that there are a lot of first-time buyers and there is a lot of activity in the market."

"It is fair to pose the question whether there was a rush to get mortgage approval, especially by first-time buyers, between October 7 when the Central Bank indicated they were changing the deposit rules, and February 9 when they actually came into force," Mr McCartney said.

Competition for houses and apartments in good location will be fierce. Mr McCartney says that quantitative easing would help feed investors' interest in Irish property, as they looked for alternatives for their money against a backdrop of falling deposit yields. The falling value of the euro may increase activity coming from overseas - particularly Britain.

Sunday Independent