IBF Housing Market Monitor shows “an illiquid housing market starved of new supply”

  • Strong uplift from low base in levels of mortgage approvals and drawdowns
  • Davy Chief Economist says:
    • Ireland needs a Help-to-Build, not Help-to-Buy scheme
    • Government policy should be focused on alleviating cost and supply constraints in construction, not loosening credit standards to first-time-buyers.

The IBF Housing Market Monitor Q1 2014, published today by the Irish Banking Federation (IBF), shows a number of recovery trends in the housing market including strong growth from a low base in both the level of mortgage approvals and drawdowns.

However, in his commentary accompanying the IBF Housing Market Monitor, Davy Chief Economist, Conall Mac Coille, characterises the market as “an illiquid housing market starved of new supply…..with Dublin’s housing market in the process of going from lukewarm to scalding hot”. 

Drawing on various published data on the residential housing market to provide a composite analysis on where the market may be going, the Q1 2014 IBF Housing Market Monitor shows the following year-on-year trends:

  • 29.3% increase in the level of mortgage approvals
  • 65.6% increase in the level of drawdowns
  • 23.6% increase in the number of dwellings completed
  • 4.5% increase in the number of properties listed for sale

In his commentary Conall Mac Coille writes that, while housing market transactions are up in the first quarter of 2014, they are still at exceptionally low levels.  And this situation could persist given that first-time buyers (FTBs) in particular are competing with cash buyers and investors and are increasingly failing to secure properties despite having approved mortgages.

“In this environment policy should be focused on alleviating supply constraints on the construction sector, while resisting efforts to loosen credit standards on mortgage lending to FTBs.” 

But for now Mac Coille sees little sign of any supply response from the construction sector, prompting him to state: “While the renewed focus from the Government’s Construction 2020 strategy is welcome, the document is short on concrete proposals to address the key issues, namely cost pressures and supply constraints in the sector.”

And the Davy Chief Economist is upbeat on the availability of mortgage credit going forward:

“As existing mortgaged households continue to pay down mortgage debt built up during the bubble years, there will be ample funds within the banking sector to meet credit demand from FTBs. So efforts to loosen credit standards on lending to FTBs should be resisted. In any case, the Central Bank of Ireland is likely to ensure affordability is a credible anchor on Irish mortgage lending this time around, mindful of current exceptionally low levels of interest rates. In short, Ireland needs a Help to Build scheme, not Help to Buy.”

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The IBF Housing Market Monitor is published quarterly. View the IBF Housing Market Monitor Q1 2014 on the IBF website.

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: Jillian Heffernan, IBF Marketing Communications Manager,

Ph: 01 474 8835 / 087 9016880

New Mortgage Lending Shows Welcome Year-on-Year Growth

  • 3,425 mortgages drawn down in Q1 2014 to the value of €568 million
  • Activity up over 65% year-on-year
  • Over 90% of new mortgage credit now going to home purchasers

The IBF/PwC Mortgage Market Profile, published today, shows that a total of 3,425 new mortgages to the value of €568 million were drawn down by borrowers here during the first quarter of 2014.

These latest figures represent an increase of 65.6% in volume and 71.6% in value on the corresponding first quarter of 2013.  Although the first quarter is traditionally the weakest in any year, these latest figures represent the first time a year-on-year increase has been recorded in the first quarter of the year since 2006.

The key home purchaser segments of the market, First Time Buyers and Mover Purchasers, continue to dominate the market accounting for almost 85.9% of new mortgages issued.  In effect, over 90% (91.2%) of all mortgage credit now goes to the home purchasing segments of the market.

The following graph presents the trend in the volume of mortgage approvals and mortgage drawdowns:

QoQ Mortgage Approvals and Drawdowns

Commenting on the latest data, Noel Brett, IBF Chief Executive, stated:

“We welcome the notable year-on-year increase in the number of new mortgages drawn down during the first quarter of this year. Notwithstanding the fact that Q1 is traditionally the weakest of the four quarters in any year, the volumes recorded are the highest Q1 figures we have seen since 2010 and the first time we have seen Q1 year-on-year growth since 2006. Today’s figures provide further encouraging evidence that the market continues to recover. That said, we remain concerned that housing supply constraints in key locations are becoming a serious impediment to sustained growth; and this is reflected in the widening gap we see developing between the level of mortgage approvals and actual drawdowns”

View the IBF PwC Mortgage Market Profile Q2 2014

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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

Mortgage Approvals Continue to Grow in March

The latest figures from the IBF Mortgage Approvals Report, published by the Irish Banking Federation (IBF), show that 1,564 mortgages to the value of €261 million were approved per month in the three months ending March 2014*.

The following are the key elements:

  • A total of 1,564 mortgages were approved in March, of which 1,452 (92%) were for house purchase.
  • The number of mortgages approved showed a year-on-year increase of 51.3% and a month-on-month increase of 4.7%.
  • The value of mortgages approved in March was €261 million of which €250 million (95%) was for house purchase.
  • The value of mortgage approvals increased by 56.3% year-on-year and by 3.6% month-on-month.

This graph presents the cumulative year to date trend in mortgage approvals up to March each year.

YTD Mortgage Approvals March 2014

The following graph presents the trend in approvals on a monthly basis since March 2012.

MoM Mortgage Approvals March 2014

Commenting on the figures, IBF Chief Executive, Noel Brett stated:

“The volume and value of mortgage approvals recorded in March have continued to show strong growth and this is further welcome evidence of a more active mortgage market. It remains to be seen however how the current shortage of suitable properties in key locations of demand will be addressed by the authorities  and this will be critical to the continued recovery of the mortgage 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.

*All figures are based on the three-month moving average.  Year-on-year compares the average for the three months ending March 2014 with the three months ending March 2013.  Month-on-month compares the average for the three months ending March 2014 with the three months ending February 2014

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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: Jillian Heffernan Marketing Communications Manager, IBF, Ph: 01 4748835 / 087 9016880