IBF Housing Market Monitor Points to Renewed Buyer Confidence

  •  Underlying trend shows increase in mortgage drawdowns
  • Signs of shortage of family homes in Dublin

The IBF Housing Market Monitor Q1 2013, published today by the Irish Banking Federation (IBF), points to a 14% increase nationally in the number of residential property transactions during the first three months of the year, as well as to signs of continued stabilisation in prices.

And in his commentary accompanying the IBF Housing Market Monitor, Goodbody Chief Economist, Dermot O’Leary, states that, while nationally we have an oversupply of housing units, a shortage of appropriate family homes is becoming increasingly clear in Dublin.

Housing Market Monitor Q1 2013

Pictured at the publication of the IBF Housing Marking Monitor Q1 2013: Dermot O’Leary, Chief Economist, Goodbody Stockbrokers and Maurice Crowley, Head of Retail, IBF.

Drawing on various published data on the residential housing market to provide a composite analysis on where the market may be going, the IBF Housing Market Monitor shows that, while the number of properties listed for sale during Q1 2013 fell 15% compared to the previous year, there were 14% more property transactions over the same period.  In fact, this is the sixth consecutive quarter of year-on-year growth in the volume of transactions.  At the same time, property prices continue to show signs of stabilisation, with the national change in prices being -3% in Q1 2013 compared to the same quarter in 2012.  Dublin property prices have seen their first year-on-year gain since Q3 2007 with prices 1.4% higher than a year ago.

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, Dermot O’Leary concludes that the mortgage market experienced in the first months of 2013 a ‘hangover’ from the ending of mortgage interest relief at the end of 2012.  Given that mortgage drawdown activity was undoubtedly brought forward from Q1 2013 into Q4 2012 as a result, he believes it’s best to look at the two quarters together.  On that basis, mortgage drawdowns were actually up by 36% relative to the same two quarters a year earlier he states.

“In contrast to the fall in mortgages drawn down, the number of property transactions increased by 14% in Q1… While one interpretation of this may be that credit is not available in the banking system, another is that buyers are using cash to invest in the Irish property market given the superior returns relative to ever-shrinking deposit rates in the Irish banks.  Either way, it is a vote of confidence that buyers are willing to dip their toes into the Irish housing market at current valuations.”

Pointing to significant differences emerging between the capital and the rest of the country, O’Leary goes on to state:

“There are increasingly divergent price trends evident across the country, with Dublin returning to annual growth for the first time in over half a decade… However, a concern would be that prices are rising predominantly because of a lack of available supply… Ireland does have an oversupply of housing units nationally, but it is becoming increasingly clear that there is a shortage of the appropriate family homes in the capital.”

The IBF Housing Market Monitor is 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.

For further information contact: Jillian Heffernan, Marketing Communications Manager, ph: 01 474 8835 / 087 9016880

Mortgage Approvals Show Significant Increase in April

  • Mortgage approvals up 22.8% on a monthly basis
  • Approvals for house purchase dominate

The latest figures from the IBF Mortgage Approvals Report, published today, show an increase of some 23% (22.8%) in the number of new mortgages approved in April compared to the previous month.  This also represents an increase of 8.7% on the same month last year.

A total of 1,433 mortgages to a value of €240m were approved by lenders here during the month of April.

Tracking the number of new mortgages approved by mainstream lenders, the IBF Mortgage Approvals Report shows that the vast majority (91%) of approvals were for house purchase. This segment grew by 23% in April over the previous month and by 11.8% year-on-year.

With the total value of mortgage approvals for house purchases standing at €226m million in April, the average mortgage approval value for the purposes of house purchase was €167,418 – up 2.2% on the same period last year.

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

“The increase in the number of new mortgage approvals recorded in April is welcome evidence of renewed activity in the mortgage market, a pattern which first emerged during the latter part of last year.  Following a more recent slowdown in activity in the first quarter of this year – due to seasonal factors and the expiration of mortgage interest relief – the latest approvals figures provide a firm indication of underlying growth in the market.”

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 report can be viewed here.

Notes: 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: Jillian Heffernan, Marketing Communications Manager, ph: 01 474 8835 / 087 9016880

Banks welcome progress towards Banking Union but call for a clear European framework for bank resolution

The Board of the European Banking Federation (EBF), meeting in Dublin on 17 May, noted with  satisfaction the steady progress towards a Single Supervisory Mechanism and reiterated its support for the objectives of the Banking Union.

EBF Exco web release May 2013

Pictured at the EBF Executive Committee dinner:  IBF President John Reynolds, Taoiseach Enda Kenny TD and Christian Clausen, President of the EBF

The common resolution regime remains a key element to be finalised in the view of the EBF Board members. “It is crucial that the resolution regime is completed, fully harmonised, with no national discretions”, commented Christian Clausen, President of the EBF and Chief Executive of Nordea Group.

“The scope of the bail-in instruments has to be clear, and proper cooperation agreements between regulators must be in place.” Board members insisted that banks’ current business models be respected in order not to distort competition by requiring any form of geographical ring-fencing. “A transparent and predictable framework is what banks and investors in general are looking for”, said Clausen, “and what is needed to ensure well-functioning markets without unnecessary costs.”

Board members remain convinced that the Banking Recovery and Resolution Directive is the first thing that needs to be implemented, before final steps are taken towards a common framework for the Single Resolution Mechanism and Authority. “Banks remain wary of further demands to contribute to any common funds, declared Clausen. The consequences of all pending measures must first be known and assessed and notable progress must have been achieved towards fiscal burden-sharing among Member States”.

EBF Board Members continue to show concern over the threats to a consistent and coherent regulatory platform and supervision in the internal market, which are put at risk by the local implementation of various initiatives with different scope and pace. Board members specifically pointed at the structural reform initiatives as a key example where it is crucial to get aligned with the international regulatory reform processes.

Europe’s banks reiterate their call on the regulators to produce and publish an assessment of the interlinkages between the reform measures that are in place and still in the pipeline on the one hand, and the overall impact of all regulatory reform measures on the other, before further measures are taken.

Mortgage Activity Reflects One-Off Factors and Seasonal Trends

  • 2,068 mortgages issued in Q1 2013, value of €331 million
  • Home purchasers account for almost 90% of new mortgage credit

The IBF/PwC Mortgage Market Profile published today shows that 2,068 new mortgages to the value of €331 million were issued during the first quarter of 2013.

These latest figures show a decline on the previous quarter reflecting particular factors at play: a front-loading of activity into Q4 2012 ahead of the ending of mortgage interest relief; and the fact that Q1 is normally the weakest quarter and Q4 the strongest for activity.

The key home purchaser segments of the market, first-time buyers and mover purchasers, continue to dominate the market accounting for over 80% (82.1%) of new mortgages issued.  In effect, almost 90% (89.5%) of all mortgage credit now goes to the home purchasing segments of the market.

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

“The lower level  of new mortgage lending recorded in this first quarter comes as no surprise and has been well flagged in the monthly approvals figures published by IBF during the quarter.  It reflects a front-loading of activity into Q4 2012 ahead of the ending of mortgage interest relief, as well as the traditional seasonal weakness generally seen at this time of year.  In effect, a significant level of borrowing activity which would ordinarily have taken place during Q1 2013 instead occurred before end-2012 to take advantage of the expiration of mortgage interest relief.  Lenders report a healthy pipeline of borrower interest and we can expect to see this reflected in the mortgage approvals figures for April which should be available shortly.”

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

Notes: 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: Jillian Heffernan, Marketing Communications Manager, IBF, ph: 01 474 8835 / 087 9016880