Mortgage Approvals – August 2017

Banking & Payments Federation Ireland (BPFI) has published the latest figures from the BPFI Mortgage Approvals Report for August 2017. [1]

The following are the key elements:

  • A total of 3,964 mortgages were approved in August 2017 – some 2,029 (51.2% of total volume) were for first-time buyers (FTBs) while mover purchasers accounted for 1,202 (30.3%)
  • The number of mortgages approved rose by 14.7% year-on-year and declined by 0.2% month-on-month.
  • The value of mortgages approved in August 2017 equated to €842 million – of which €428 million (50.8%) was accounted for by FTBs and €293 million (34.8%) by mover purchasers.
  • The value of mortgage approvals rose by 2% year-on-year and rose by 0.9% month-on-month.

Re-mortgage/switching approval volumes grew 22.6% on a year-on-year basis with activity accounting for 9.5% of the value and  8.9% 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 August 2017  as well as the time series data file is available on the BPFI website here. The report is also available here.

[1] 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: Keira Doyle, Head of Communications, 087 2694460

FTB lending is growing in the UK and Ireland despite supply issues

The research, UK and Irish Housing Markets: A First-Time Buyer Perspective, draws on detailed loan data to provide the first detailed comparison of mortgage markets in the two countries.  Some of the key findings are that:

  • the age distribution of first-time buyers in the UK was broadly unchanged between 2004 and 2016, while in Ireland there has been a significant fall in young first-time buyer numbers;
  • first-time buyers in the UK have been borrowing over longer terms since the financial crisis, while in Ireland the trend has been to borrow for shorter periods;
  • borrowing with small deposits, of up to 5% of the purchase price, remains largely absent from both countries;
  • higher property prices mean that first-time buyers typically borrow a higher multiple of their income in the capital cities of London and Dublin; and
  • there is evidence of loans bunching just below macro-prudential borrowing limits in both countries – 90% loan-to-value and 3.5 times income in Ireland, and 4.5 times income in the UK – but lending above these limits has fallen in both countries.

The report says that first-time buyers are vital to the health of the housing market, providing liquidity and helping existing home-owners to move.  But they are affected by demographic, government and regulatory changes that could alter the profile of first-time buyers:

  • older people account for a growing share of the population, and experiences that prompt household formation, like marriage and childbirth, are occurring later in life;
  • housebuilding and sales activity are still recovering from the financial crisis, and a lack of liquidity in the market means that people are often unable or unwilling to move; and
  • government housing schemes have sought to address these problems in both countries, but they have been more explicitly targeted at first-time buyers in Ireland than in the UK.

In the executive summary, the report’s joint authors, Anthony O’Brien, of the BPFI, and Mohammad Jamei, of UK Finance, comment:

“Ireland and the UK have experienced similar large falls in the rate of home-ownership since the mid-2000s.   Government schemes aim to promote activity in the housing market, while regulation aims to keep the market sustainable.  Given that housing supply has been sluggish since 2009 and demand has remained high, there is potential for tension between regulation and government housing schemes.  This is likely to continue for the foreseeable future unless housing supply grows more quickly.”

The full report is available on our website here: Other Research Reports.

Notes to Editors

  1. UK Finance is a new trade association which was formed on 1 July 2017 to represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation brings together activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.UK Finance is a new trade association which was formed on 1 July 2017 to represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation brings together activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.
  2. Banking & Payments Federation Ireland (BPFI) is the voice of banking and payments in Ireland.  Representing over 70 domestic and international member institutions, we mobilise the sector’s collective resources and insights to deliver value and benefit to members, enabling them to build competitive sustainable businesses which support customers, the economy and society.
  3. The research report, UK and Irish Housing Markets: A First-Time Buyer Perspective, is published by UK Finance and Banking and Payments Federation Ireland (BPFI).  The joint authors are Anthony O’Brien, head of sector research and analysis at BPFI, and Mohammad Jamei, senior economist at UK Finance.

 

Contact: Keira Doyle, Head of Communications, 087 2694460

 

BPFI Housing Market Monitor highlights pick up in house building, but still well below market demand

  • Housing Market Monitor now includes loan level data for first time
  • Lack of supply leading to significant pressure on property prices as well as rents

Banking & Payments Federation Ireland (BPFI) today published the BPFI Housing Market Monitor for Q2 2017. The monitor draws on a range of published data under the three key headings of housing supply, housing prices and rents, and housing transactions in its assessment of the current state of the housing market.

In his commentary accompanying the report, BPFI’s Chief Economist, Dr Ali Uğur, states that residential construction capacity cannot match the current housing demand and that assuming a 20% annual growth rate, total completions will only just reach over 30,000 units in 2020: “Price increases seem to have gained momentum since the second half of 2016, after levelling at single digits with residential property prices increasing by around 58% since early 2013. It is now widely accepted that the current acceleration in residential property prices is mainly due to this persistent lack of supply, as well as higher incomes driven by strong growth in the economy. Although the level has picked up in completions and commencements in the last couple of years, with 38,600 units completed between 2014 and 2016, it’s not nearly enough with 75,000 required during that same time period.”

Dr Uğur also notes that member banks are well positioned to provide appropriate level of financial support to feasible house building projects (along with individual customers), whilst at the same time Government has the ability to play an important role by supporting the provision of new and innovative finance structures:

“For the first time BPFI is publishing loan-level data, uniquely collated from our member banks. Among other things this shows that, at €56,800, Dublin had the highest median deposit in Q2 2017 for first time buyers (FTBs) and €119,459 for mover purchasers – both a reflection of market prices. The median deposit in Dublin rose by 11.6% year-on-year for FTBs and by 6.6% for mover purchasers. By contrast in the Dublin commuter areas the average deposit for FTBs fell by 7.5% year-on-year in Q1 and 13.2% in Q2 2017, equating to  €31,910 for FTBs.”

To view the report, click here.

Note: Banking & Payments Federation Ireland (BPFI) 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: Keira Doyle, Head of Communications, 087 269 4460

BPFI Publishes New Payments Monitor

  • Huge growth in contactless and digital transactions

Banking & Payments Federation Ireland (BPFI) today launched a new report, BPFI Payments Monitor.* The  report, set for bi-annual publication, provides up-to-date trends across the range of payment options used by personal and business customers alike; from cash to card, cheque to digital, contact to contactless, paper to paperless.

The following are key highlights of the report:

  • Strong growth across all digital channels. Over 21 million transactions were undertaken in Q2 2017, representing a 19.4% year-on-year increase.
  • Explosive year-on-year growth in contactless card transaction volume (138%) and value (149%). Almost  €0.7 billion was spent through contactless payments in Q2 2017 alone.
  • Continued decline in paper-based transactions representing a 16.5% year on year decrease in written cheques, equating to a decline of 2.2 million.
  • Stagnation in ATM-based cash withdrawals. Volume and value levels have remained stagnant over the last years despite an improving economic environment.

Commenting on the report, Maurice Crowley, Director Banking & Payments, said:

This new report provides a comprehensive picture of means of payment, via the various payments systems, in Ireland. Over the coming 12 to 18 months, the Payment Services Directive (PSD2) and the advent of third-party service providers, an increased interest in Instant Payments and the continuing adoption by consumers of new technology will likely result in the development of yet more new services. In addition, with the introduction of new FinTech service providers to the Irish and wider European markets such sector developments will further drive the increase in digital transaction volumes.”

[*] Data collection for the BPFI Payments Monitor Report covers the period from January 2016 onwards. Based on data from BPFI member banks and Central Bank of Ireland, the publication  provides a comprehensive picture of the various means of payment executed via the various payments systems in Ireland. This Monitor should  prove particularly useful in informing policy and practice in the payments area and will also provide valuable aggregate data to member banks. The BPFI Payments Monitor Report is available on the BPFI website here.

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: Keira Doyle, Head of Communications, 087 269 4460, Keira.doyle@bpfi.ie