New data series confirms increase in the level of mortgage market activity

  • Mortgage approvals up 27% overall on last year
  • Approvals for house purchase up 37%

A new data series which tracks mortgage approvals shows that a total of 1,677 mortgages were approved by lenders here during the month of October.  This represents an increase of some 27% (26.9%) compared to the same month in 2011 and an increase of 10.3% over the previous month of September.

This overall number is made up almost entirely of mortgage approvals for house purchase (1,565), which increased year-on-year by 37.3%; the much lower number of approvals for re-mortgages and top ups (112) actually declined over the same period.  The average mortgage approval value for purposes of house purchase stands at €174,677 – down by 3% year-on-year.

Data collection for this IBF Mortgage Approvals Report began in August 2012 covering the period from January 2011 onwards in respect of the market’s main mortgage lenders.  It will be published monthly.

Commenting on the data, IBF’s Director of Public Affairs, Felix O’Regan, stated:

“This new IBF Mortgage Approvals Report provides an important lead indicator of future mortgage market activity.  The significant uplift it shows in the level of mortgage approvals is further welcome evidence of renewed activity, coming as it does on the heels of figures we published earlier this month which confirmed the first year-on-year increase since 2006 in the number of new mortgages actually drawn down.  Since the majority of approvals usually lead to draw downs, the level of approvals in October suggests that the drawdown figures for Q4 2012 when published in the new year could show some further growth in the market; however, the level of approvals for November and December will need to be seen before a more definitive judgement can be made.  The availability of mortgage interest relief is seen as a contributory factor and it remains to be seen what effect its abolition after 31st December will have.”

The IBF Mortgage Approvals Report can be viewed on the web here.

Note: The Irish Banking Federation (IBF) is the principal voice of 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.

Contact: Nuala Buttner, Q4 Public Relations, tel 085 1744275; IBF tel 01-6715311

Positive Trends in SME Credit Demand Study are Welcome, says IBF

The Department of Finance/Red C SME Credit Demand Survey published today shows a number of positive trends which are welcome.  These include a slight increase in credit applications from SMEs, a more significant increase in applications approved by banks and a stabilisation in SME turnover, profitability and staffing.

Notwithstanding the difficult trading conditions that continue for many SMEs the study shows a slight increase of one percentage point to 39% in the number of SMEs requesting credit in the April-Sept’12 period and an increase of four percentage points to 76% in the number of applications approved in full/part by lenders.  The continuing upward trend in the number of formal, as against informal, applications is welcome – more than three-quarters are now formal – as this provides the documentary evidence in support of the application.  It is notable, but scarcely surprising, that approval rates continue to be strongly linked to business performance and viability.

These positive trends in respect of credit demand and supply mirror the most recent statistics compiled by IBF.  These show that the main business lending banks between them approved 80,000 credit applications in the first nine months of this year – an average of over 2,000 per week.

It remains a matter of concern however that, despite these positive trends, the attitude among many SMEs is that banks are not lending.  As the study confirms, SMEs generally are still forming their views based on anecdote rather than any personal experience.  This is why IBF and our member banks continue to strongly encourage SMEs to formally apply for credit where they feel they have a good proposition and to provide all relevant supporting documentation.  This is also why IBF continues to work very closely with various stakeholders on important initiatives in support of a productive bank/SME relationship, including:

  • our providing developing a Business Plan and Cashflow guidance for SMEs and microenterprises – doing so jointly with the various accountancy bodies (CCAB-I); see here
  • our actively promotingwww.smallbusinessfinance.ieas a comprehensive source of information on small business finance – jointly developed with Chambers Ireland;
  • our supporting and assisting in the implementation of the Government’s Credit Guarantee Scheme and Microenterprise Loan Fund.

Complemented by a range of recently-launched, bank-led supports and solutions for SMEs, this represents a solid basis on which we can progress a shared agenda of supporting existing businesses and new growth opportunities.

Note: The Irish Banking Federation (IBF) is the principal voice 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

Increase of some 24% in number of new mortgages issued

  • First year-on-year increase in new mortgages since 2006
  • Home purchasers account for 85% of all new mortgages

The IBF/PwC Mortgage Market Profile, published today, shows that the number of new mortgages issued in Q3 2012 represents an increase of 23.5% compared with the previous quarter and an increase of 10.4% compared with Q3 2011. This is the first year-on-year increase since Q3 2006.

A total of 3,983 new mortgages to the value of €663 million were issued during the third quarter of 2012, bringing to almost 10,000 (9,838) the total number of new mortgages issued during 2012 to date. The home formation segments of the market – first-time buyers and mover purchasers – continue to dominate what is now a smaller market in terms of overall activity. Together they account for more than 8 out of every 10 mortgages issued.

The Q3 data also shows that mortgage market activity is, for the first time in many quarters, back in positive growth territory again – as is evident from the following graph:

Mortgage lending trend Q3 2012

Commenting on the latest data, IBF’s Director of Public Affairs, Felix O’Regan, stated:

“Whereas data from previous quarters showed that contraction in activity continued to slow, the Q3 data is showing actual growth in activity – something we haven’t seen in some time. This is a very welcome trend and one we might hope to see sustained, particularly in light of reports from market analysts indicating a stabilisation in average house prices in Dublin, for example. Activity during the final quarter of this year will be closely watched as mortgages taken out after 31st December next will not qualify for mortgage interest relief. We will be well positioned to monitor trends more closely over the coming quarters with the help of new mortgage approvals data which we plan to publish shortly as a new lead indicator of future mortgage market activity.”

The IBF/PwC Mortgage Market Profile can be viewed here.