Mortgage Market Activity Remains Weak

  • Almost 28,000 mortgages issued in 2010
  • More than three-quarters of all mortgage credit now going to home purchasers

The IBF/PwC Mortgage Market Profile published today shows that 5,624 new mortgages to the value of €982 million were issued during the fourth quarter of 2010.  This brings to close on 28,000 the total number of new mortgages issued in 2010 at a value of over €4.75 billion.

The volume of new lending in Q4 2010 is down 22.5% compared to the previous quarter and is down 43.5% on the previous year.

The key home purchaser segments of the market, first-time buyers and mover purchasers, together now account for 77% of the market by value and 67% by volume – albeit a smaller market.  This means that more than three-quarters of all mortgage credit issued now goes to the home purchasing segments of the market.

Significantly, lenders report that borrowers seem to be increasingly better prepared – both in terms of the level of savings at their disposal to more than meet the deposit required and their measured approach to drawing down the approved loan.  At the same time, lenders continue to point to the need for prudent lending with the all-important focus on the borrower’s capacity to repay.

Commenting on the data, IBF Chief Executive, Pat Farrell, stated:

“Against a very challenging economic background it can come as little surprise that mortgage market activity remains weak.  The impact of the last Budget on consumer spending, the reduced level of consumer confidence during Q4 2010, as reflected in the 44.4 low recorded in December in the KBC Ireland/ESRI Consumer Sentiment Index and continuing uncertainty around future employment prospects are among the factors that have made manageable borrowing and prudent lending an ongoing challenge.”

The IBF/PwC Mortgage Market Profile can be viewed on the web at here.

Note:  Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Further Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644

Early Customer/Lender Engagement is Key to Arrears Management

In noting the increase in the number of mortgage accounts in arrears as published by the Central Bank today, the Irish Banking Federation (IBF) believes that early and constructive engagement between borrowers and their lenders is key to managing arrears.  This is reflected in the Central Bank’s confirmation that tens of thousands of mortgages have been restructured for borrowers by their lenders.

The difficult economic circumstances in which some borrowers find themselves today has, not surprisingly, given rise to an increase to 5.7% (of all mortgage accounts) in the level of arrears of 90 days or more.  While the vast majority of borrowers continue to meet their mortgage repayments, it is important that those borrowers in or facing difficulties are assisted in every reasonable way possible.  This is what IBF member institutions have been doing and continue to do; and this is reflected in the 59,229 restructured mortgages now in place, 35,205 of which are not in arrears – all of which actually pre-date the introduction on 1st January last of the revised Code of Conduct on Mortgage Arrears.

IBF concurs with the Central Bank’s assertion that this figure shows “that arrangements are available to those borrowers who seek help in dealing with pre-arrears or arrears difficulties”.  IBF is also encouraged by the Central Bank’s finding that the rate of increase in the number of mortgage accounts 90+ days in arrears has slowed marginally over recent quarters.

IBF strongly encourages borrowers currently or likely to be under pressure with their repayments to make early contact with their lenders with a view to finding a workable arrangement that will assist in the management of their financial difficulties, help to avoid repossession and secure peace of mind.  In this regard, IBF notes that the level of repossession is still comparatively low – 13 per 100,000 mortgages here compared to 69 per 100,000 in the UK.

Notes: The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Further Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644

Banks’ Support for Viable SMEs

The Irish Banking Federation (IBF) welcomes the assessment of the independent Credit Review Office (CRO), as published today, that the banks covered by the review process are lending to viable SMEs.

Taken in conjunction with last week’s Central Bank Review of SME Lending which documented significant improvements in the policies and practices employed by banks in support of their SME customers, the CRO report provides further concrete evidence of the ongoing commitment by banks to the SME sector.  Despite the ongoing challenges facing the sector, there is a strong commitment and determination to make every effort possible to support businesses through these difficult times.

IBF encourages all SMEs requiring credit to apply to their bank and to provide the relevant supporting documentation required by the lender to make an informed decision.  To this end, the Your Business, Your Bank, recently published by the Minister for Enterprise, Trade & Innovation – and to which IBF and member banks contributed along with other stakeholders – provides SMEs with all the relevant information about the credit application and assessment process.  The publication can be downloaded from IBF here.

The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644