January mortgage approvals reflect seasonal and one-off factors

  • 9 out of 10 new approvals are for property purchase

A fall in the level of new mortgage approvals recorded for January 2013 reflects the traditional seasonal weakness evident in Q1 figures each year as well as a front-loading of activity into 2012 ahead of the ending of mortgage interest relief.

The third monthly IBF Mortgage Approvals Report shows that a total of 841 mortgages were approved by lenders here in January 2013 to the value of €134 million.  The vast majority (91%) of these was for property purchase, the balance for re-mortgages and top ups.

While the January approval volumes are lower than in the previous month and year, there was an increase of 20.3% in the figures when comparing the three-month period, Nov. 2012-Jan. 2013, with the same period the previous year.   Monthly and annual changes are calculated based on changes in the three-month moving average to allow for volatility in monthly volumes.

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

“It comes as no surprise that the level of approvals for this January is down.  The early part of the year is traditionally the weakest; also, a good deal of activity that would ordinarily have taken place in January instead occurred before end-2012 to take advantage of the expiration of mortgage interest relief.  That said, lenders continue to experience a healthy level of borrower interest and this is likely to be reflected in approvals data over the following months.”

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

Notes: Data collection for the IBF Mortgage Approvals Report began in August 2012 covering the period from January 2011 onwards in respect of the market’s main mortgage lenders.

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

IBF welcomes Minister’s announcement on the ending of the Bank Guarantee Scheme

The Irish Banking Federation (IBF) and its members welcome the announcement by the Minister for Finance that the Bank Guarantee Scheme (the Eligible Liabilities Guarantee Scheme) will end for all new liabilities from midnight on 28 March next.

The IBF agrees with the Minister’s statement that this marks a further significant step in the normalisation of our banking system.

New IBF Housing Market Monitor to help identify trends and inform policy

  • Risk of housing shortage in some areas
  • Likely level of future mortgage activity

A new monitor of housing market activity, published today by the Irish Banking Federation (IBF), points to the need to ensure that a housing supply shortage does not arise in certain areas.  It also indicates what the future requirement for first-time buyer mortgages might be in light of household formation.

Compiled in collaboration with Ronan Lyons, daft.ie Economist, who also provides a commentary, the IBF Housing Market Monitordraws on various published data on the residential housing market in order to provide a composite analysis on where the market is today and where it may be going.  IBF Chief Executive, Pat Farrell, states:

“While each piece of existing data is significant in itself, there is added value in looking at all of this data together to see what it is telling us in overall terms about the housing market.  We believe this will make an important contribution to policy formation and debate about the future housing market in Ireland.”

Analysing a range of statistics under the three key headings of housing supply, housing prices and housing transactions, and assessing these on a composite basis, Ronan Lyons concludes:

“Among the statistics presented here there are signs that in certain segments the time of a glut in houses is past and instead policymakers need to ensure no shortages emerge…… construction of new homes in urban areas is likely to be central in ensuring that first time buyers starting new homes over the next few years have somewhere to live.”

On the matter of mortgage supply and demand Ronan Lyons states:

“It is encouraging to see that the number of mortgages approved and the number drawn down increased in 2012.  The number of approvals was up by almost one quarter, while the number of drawdowns was up by roughly 28%.  The only concern is that the turnaround in activity may be temporary, as there were spikes in both approvals and drawdowns in Q4, just before the end of mortgage interest relief.  We will not know until the next issue of the IBF Housing Market Monitor whether the first half of 2013 will see a hangover from the end of mortgage interest relief.  But clearly the focus now must be on increasing the number of transactions from what is an unhealthily low level.  A country where there are roughly 25,000 new households forming every year will need a multiple of the 8,600 first-time buyer mortgages drawn down in 2012.  That, however, is as much about demand for mortgages – and thus confidence in the country’s economic future – as it is about supply.”

The IBF Housing Market Monitor will be published quarterly and 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.

Further Information: Nuala Buttner, Q4, tel. 085 1744275; IBF,  tel, 6715311

Number of New Mortgages Issued Continues to Increase

  • Seasonal and one-off factors drive growth of more than 50% in Q4
  • First year-on-year increase in annual volumes since 2006
  • Home formation accounting for nine out of ten mortgages

The IBF/PwC Mortgage Market Profile published today shows that 6,043 new mortgages to the value of almost €1 billion were issued during the fourth quarter of 2012.  This represents an increase of over 51% on the previous quarter and an increase of over 56% on Q4 in 2011.

It brings to 15,881 the total number of new mortgages issued in 2012 compared to 14,273 during 2011.  This is the first year-on-year increase in annual volumes in new mortgage lending since 2006.

The key home purchaser segments of the market – first-time buyers and mover-purchasers – are by far the most significant drivers of the increase in what is now a smaller market in terms of overall activity.  Together they now account for around 9 of every 10 new mortgages issued.  First-time buyers loan volumes alone have reached their highest level since Q4 2008.

There is considerable seasonality in the mortgage market:  Q4 is normally the strongest quarter and Q1 the weakest.  However, volumes were boosted in Q4 2012 by an exceptional level of activity related to the expiration of mortgage interest relief. The average first time buyer’s loan now stands at just over €154,000, reflecting house prices in the market and increased affordability.

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

“The Q4 figures were particularly strong and IBF members worked hard to enable customers to draw down their mortgages in time to avail of mortgage interest relief before the qualification period expired.  The continued increase in the number of new mortgages drawn down by borrowers points to a market that is moving from stabilisation into recovery, supported as it is by a certain levelling of house prices, improved borrower sentiment and the increased availability of finance from lenders.  Sustaining this trend over coming quarters will be dependent on maintaining the conditions necessary to underpin a healthy, fully-functioning secured credit market.  In relation to the overall mortgage market in general a number of key policy issues need to be addressed: namely, clear policy support for the prioritisation of secured over unsecured credit as the new personal insolvency regime unfolds and urgent action on the Dunne judgement.”

The IBF/PwC Mortgage Market Profile can be viewed 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.