Mortgage Approvals – May 2017

Banking & Payments Federation Ireland (BPFI) has published the latest figures from the BPFI Mortgage Approvals Report for May 2017.*

The following are the key elements:

  • A total of 4,124 mortgages were approved in May 2017 – some 2,148 (52.1% of total volume) were for first-time buyers (FTBs) while mover purchasers accounted for 1,242 (30.1%).
  • The number of mortgages approved rose by 35.4% year-on-year and by 23.5% month-on-month.
  • The value of mortgages approved in May 2017 was €884 million – of which €448 million (50.7%) was accounted for by FTBs and €327 million (37.0%) by mover purchasers.
  • The value of mortgage approvals rose by 45.1% year-on-year and by 29.1% month-on-month.

Re-mortgage or switching approvals grew on a year-on-year basis with activity accounting for 7.5% of the value and 7.6% of the volume of mortgages.

Data collection for the BPFI Mortgage Approvals Report began in September 2012 covering the period from January 2011 onwards in respect of the market’s main mortgage lenders. The BPFI Mortgage Approvals Report February 2017  as well as the time series data file is available on the BPFI website here.

[*] Up to March 2017, approval figures had been based on the three-month moving average.  From April 2017, the base monthly data has been reported. The full time series of monthly data from January 2011 onwards is available on the BPFI website.

Note: Banking & Payments Federation Ireland is the voice of banking and payments 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, Head of Communications, 087 9016880

Digital Single Market

In May, the European Commission published its Mid-Term Review of the Digital Single Market Agenda where it announced a number of key areas for continued work, many of which are relevant to financial services. The review comes halfway through the Commission’s mandate and is both an important marker of progress made in the last 2.5 years and a reminder of the key actions to take in the remaining 2.5 years before the appointment of a new Commission in 2019. These include a forthcoming legislative proposal on the free flow of data in the European Union, in addition to further action to cover cloud contracts for business users and switching of cloud services providers. The Commission will also review the EU Cyber Security Strategy and the mandate and tasks of the European Union Agency for Network and Information Security, an important action in light of recent cyber-attacks. Consideration is also reportedly being given to the creation of a European ICT security framework. One other area of work the Commission wants to prioritise is that of online platforms and addressing unfair practices by exploring dispute resolution, fair practices criteria and transparency requirements. BPFI is monitoring developments in this space closely and in parallel feeding into the European Commission directly on another issue of interest in the Digital space, Fintech. The Commission recently consulted on Fintech in Europe with a view to publishing an Action Plan on this before the end of the year.

Progress continues on Payments Account Directive (PAD)

BPFI is currently reviewing the EBA’s final draft Technical Standards setting out the standardised terminology for services linked to a payment account, and the standardised formats and common symbol for the Fee Information Document (FID) and Statement of Fees (SoF). The draft will now be reviewed by the European Commission. Following BPFI’s review we will take necessary steps to engage with the relevant stakeholders to address any concerns that may arise.

 Separately BPFI has liaised with the Department of Finance and Revenue to progress closure on a possible loophole relating to stamp duty on Payment Accounts with Basic Features. We have proposed a possible amendment to the Finance Bill 2017 which is currently being considered by Government departments. Additionally we have written to the Central Bank to confirm the timeframes our members will adhere to for the production of the first SoF for customers.

Relocation of the EBA

EU27 leaders recently discussed the criteria for the relocation of the EU agencies currently located in the UK, including the European Banking Authority (EBA), and a final decision should be made in October. Ireland maintains its bid for the EBA, however it is also bidding for the European Medical Agency. Debates continue as to whether the EBA and European Insurance and Occupational Pensions Authority (EIOPA) should be merged and located in Frankfurt, or whether the three-pillar approach should be maintained with an enhanced capital market supervisor role for the European Securities and Markets Authority (ESMA). France is against the idea of a merger as are many  smaller member states and non-Eurozone members. In parallel, the Commission will review the founding regulations of the European Supervisory Authorities more generally with discussions around role, governance, funding and other issues. Before the end of the year the Commission is committed to proposing amendments to the functioning of ESMA (and possibly also the EBA and EIOPA) to enhance ESMA’s powers and increase effective supervision for specific functions where warranted by the need to support a functioning Capital Markets Union, a key political priority for the current European Commission.

Central Bank Consultation Paper on investment framework for credit unions

BPFI is currently preparing its response to the Central Bank consultation on potential changes to the investment framework for credit unions. Under the existing regulations, credit unions are permitted to invest in a range of specified investment classes, which include government securities, bank deposits, bank bonds and collective investment schemes made up of these instruments. Investments in these classes of investments are subject to specified maturity and concentration limits which are set out in the regulations.

The consultation paper is proposing that credit unions would not be permitted to invest in subordinated debt instruments that are eligible for minimum requirements for own funds and eligible liabilities (MREL). The paper sets out that this is due to their risk profile and the potential implications for credit unions should the institution that issued the instrument enter into resolution. Based on this, the CBI is proposing amending the definition of bank bonds in the 2016 Regulations to clarify that bonds that are subordinated to any senior bonds issued by a credit institution do not fall within the definition of ‘bank bonds’ set out in the investment regulations. This will have an impact on financial institutions, who will be issuing senior unsecured debt via Holdcos as a result of the  Bank Recovery and Resolution Directive (BRRD), as based on the proposed guidelines these bonds will not be compliant.

Impact of amendments to the Directive on Payment Services (PSD2)

BPFI supports the objective of the Payment Services Directive 2(PSD2) to encourage a new minimum standard of openness and innovation in payments.  However, we are disappointed that the European Commission has decided to propose amendments to the draft Regulatory Technical Standards (RTS) issued by the European Banking Authority in February 2017. The original proposed RTS required that banks facilitate access to accounts by third party providers either by creating a ‘dedicated interface’ or by upgrading their existing user interface.

As part of the amendments, the Commission requires banks to simultaneously implement a “fall back” option if deploying a dedicated interface. This may deter banks from investing in the preferred, standardised and more secure dedicated interface and will likely lead to the deployment of various and diverse solutions, leading to fragmentation within the market as Account Information Service Providers (AISPs), Payment Initiation Service Providers (PISPs) and the wider Fintech community struggle with interoperability and other issues. BPFI believes that this could have long-term effects on market harmonisation by undermining the clear benefits of dedicated interfaces, which can be standardised, thereby facilitating a more generally secure operating environment and fostering increased competition whilst also promoting greater consumer protection and anti-fraud initiatives.

Stakeholder Engagement

BPFI recently held a series of very fruitful meetings in Brussels with, among others, members of the EU Commission Brexit Task Force, Commission Vice-President Valdis Dombrovskis and his team, Ambassador Declan Kelleher and the Irish Permanent Representative team as well as Brian Hayes MEP.  BPFI’s Chief Executive, Directors of Banking & Payments and Public Affairs as well as  the Head of EU Affairs were joined by members of BPFI’s  Council Executive Advisory Group including BPFI President, Jonathon Lowey, BPFI Vice President, Liam McLoughlin, and FIBI Chairman, Colin Moreland.  All the meetings proved informative and productive and provide the basis for ongoing engagement.

BPFI facilitated a presentation to member bank representatives by Derville Rowland, Director of Enforcement, Central Bank of Ireland.  Chief Risk Officers were joined by senior compliance personnel from a wide range of domestic and international member institutions to be updated on  the AML risk-based supervisory framework in the Central Bank, outcomes and expectations arising out of AML inspections and the challenges and opportunities that lie ahead in AML regulation.  This was followed by a very useful Q&A session and discussion.

Stakeholders representative of a wide range of housing market interests attended the BPFI briefing on our latest Housing Market Monitor. BPFI executives and member bank representatives contributed to the very informative discussion which followed the presentation by BPFI Chief Economist, Ali Ugur. Publication of the latest DKM/BPFI SME Market Monitor also afforded the opportunity to discuss factors impacting on the environment for SMEs.  Stakeholders from business representative groups, Government departments and the ESRI contributed to the discussion which followed a presentation by DKM’s Annette Hughes.

BPFI prepares response to Personal Insolvency Consultation

BPFI is currently preparing a response to the Department of Justice & Equality consultation on the operation of Part 3 of the Personal Insolvency Acts 2012-2015. Part 3 provides, among other things, for the definition and operation in practice of the three protected debt resolution processes for insolvent individuals including Debt Relief Notices, Debt Settlement Arrangements, and Personal Insolvency Arrangements. BPFI is also participating in the Insolvency Service of Ireland (ISI) Consultative Forum and is working with other stakeholders on an agreed response on aspects of the consultation.  The closing date for submissions is 30 June 2017.

Rollout of Central Credit Register (CCR)

With the rollout of the new Central Credit Register (CCR) now imminent, BPFI and its members continue to liaise with the Central Bank to resolve some outstanding design issues for Phase 1, with work also commencing on detailed design for Phase 2. It has recently transpired that the CRA does not provide the necessary legal basis to collect data on some credit agreements. Credit agreements in this category could, subject to their contractual terms, include hire purchase, personal contract plans, leasing finance, and agreements for the purchase of goods through licensed moneylenders. BPFI is actively engaged with the Central Bank on this development and all aspects of the CCR, and our impacted members. We have worked through many challenges that the CCR has presented for Phase 1 and it has been clear that this collaborative approach has been beneficial to both the Central Bank and the CIPs particularly in light of the tight deadlines and far reaching implications. A media campaign was initiated in May by the Central Bank to raise awareness of the CCR and in support of this campaign BPFI recently ran a number of press notices in a series of national newspapers.