Mortgage market growth slows to more sustainable levels – IBF data

Over 41,000 new mortgages issued in Q2 2007
Market easing evident across all sectors
Continued growth in switching activity

The latest in the series of the IBF/PwC Mortgage Market Profile shows that new lending is slowing to a more sustainable level in a mortgage market that continues to grow in overall terms. Published today by the Irish Banking Federation (IBF), the data also shows that switching activity continues apace.

This fifth in the series of the IBF/PwC Mortgage Market Profile shows that 41,151 new mortgages to the value of over €8.7 billion were issued during the second quarter of 2007. While reflecting an increase over the first quarter of 2007 in both volume (+7.6%) and value (+11.8%), a year-on-year comparison confirms a slowdown in the level of new lending.

The following are among the key findings to emerge from an analysis of the published data:

  1. In value terms, the year-on-year slowdown in new mortgage lending is evident across most market segments – the one notable exception is re-mortgaging (switching) which has recorded growth of 6.7%. Now accounting for 15.5% of the total number of new mortgages issued, switching activity is at its highest level since this series commenced in 2005;
  2. At 17.3% of the market (by value), the residential investment letting purchase segment is at its lowest share of the overall market since the series commenced;
  3. The first time buyer segment is proving resilient, accounting for 19.2% (7,883) of all new mortgages issued in the second quarter.

Notwithstanding the anticipated slowdown in new mortgage lending, Central Bank data confirms that, at €132 billion, the overall size of the mortgage market continues to increase. And data from the European Mortgage Federation confirms that Ireland still has one of the highest rates of growth in outstanding residential mortgages in the euro area.

Commenting on the data, IBF Chief Executive, Pat Farrell, stated: “The IBF/PwC Mortgage Market Profile for Q2 2007 is consistent with other indicators of market activity and consumer sentiment. While new mortgage lending has slowed to more sustainable levels – and this is to be welcomed – the fact remains that the market overall continues to grow. At the same time, affordability appears to be improving for first time buyers and market uncertainty around stamp duty has been addressed.”