Strong growth in latest mortgage approvals figures driven by first-time buyers – BPFI data

Over 4,514 mortgages to the value of €1 billion were approved in October

Strongest growth evident with first-time buyers – up 15.6% year on year

Banking & Payments Federation Ireland (BPFI) has published the latest figures from the BPFI Mortgage Approvals Report for October 2019.*

The following are the key elements:

  • A total of 4,514 mortgages were approved in October – some  2,329 (51.6%) were for first-time buyers (FTBs) while mover purchasers accounted for 1,219 (27%).
  • The number of mortgages approved rose by 18% month-on-month and by 5.9% year-on-year.
  • Mortgages approved in October 2019 were valued at €1,020 million – of which FTBs accounted for €547 million (53.6%) and €308 million (30.2%) by mover purchasers.
  • The value of mortgage approvals rose by 22.5% month-on-month and by 9.7% year-on-year.

Re-mortgage/switching approvals rose by 17.1% in volume on the previous month and fell by 1.5% year on year.

Commenting on the figures, Brian Hayes, BPFI Chief Executive, stated:

“Mortgage approvals grew in both volume and value terms in October.  This growth continues to be driven by first-time buyers where approvals were up 15.6% on the same period last year.  In fact, mortgage approvals for those buying a home for the first time represented over half of the total volume and value. First-time buyers remain a key segment of the market for lenders.”

Annualised mortgage approval activity continues to follow a steady pattern of growth as the graph above shows.

[*] The full time series of monthly data from January 2011 onwards is available on the BPFI website.

 

Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: For further information contact Jillian Heffernan, Head of Communications, jillian.heffernan@bpfi.ie 087 9016880

Over €4 billion of online purchases using cards expected between November and December

Consumers warned to make purchases using only secure websites

FraudSMART, a fraud awareness initiative led by Banking & Payments Federation Ireland (BPFI) and supported by An Garda Síochána, have issued a strong warning to thousands of consumers to be extra cautious in their online activity on Black Friday and Cyber Monday and to make purchases using only secure websites, where ‘https’ and a padlock symbol are on display.

Olivia Buckley, Head of Fraud Prevention FraudSMART, said well over €4 billion is expected to be spent online with payment cards throughout November and December. “Almost €12 billion was spent using cards between November and December last year, with well over €4 billion of that spend accounted for by e-commerce. Purchasing online is growing amongst Irish consumers; €41.3bn of purchases were made with cards in the first nine months of this year alone with some €20.1bn of that spending carried out online, almost double the amount for the same period in 2015.”

Ms. Buckley also said: “In the region of 75% of all card fraud occurs online, so serious caution is required when purchasing goods or services. The large volumes of online purchases expected to be made this week means fraudsters will be attempting to lure consumers into fraudulent websites, while posing as authentic suppliers. The most popular goods purchased online are clothes and sportswear, along with household goods”.

Detective Chief Superintendent Pat Lordan of the Garda National Economic Crime Bureau said “As the pre-Christmas rush draws thousands of shoppers online, we urge that people be aware of the potential for fraud, whether they are buying or selling a product. People should be particularly careful when high value products are offered at prices significantly under market value and when there is a demand for payment in advance to a person or entity that are not known or not clearly identifiable”.

FraudSMART and An Garda Síochána said there are some critical pieces of advice that consumers must follow to help protect their finances and their bank account.

  • Use secure websites. The website address should be ‘https’ before the purchase is made, indicating a secure connection
  • Use sites where a padlock symbol is shown beside the website address
  • Do not under any circumstances use public Wi-Fi when making payments – switch to 3G/4G on your phone if necessary
  • Independently visit the website of the online sales company as opposed to clicking on social media or pop-up adverts
  • Be cautious about claiming outrageous offers – if it sounds too good to be true it probably is
  • Stick to well-known websites or websites that you are familiar with or websites associated with high street retail outlets

Consumers can get advice on how to avoid fraud by visiting www.FraudSMART.ie

For further information

Olivia Buckley, Head of Fraud Prevention, FraudSMART, Banking & Payments Federation Ireland.
Tel: 00 353 87 6298113 Email: Olivia.buckley@bpfi.ie

Notes to Editor

The following are the most common fraud scams by which criminals can obtain payment card details.

Phishing is where criminals send unsolicited emails to individuals which purport to have been sent from genuine businesses or individuals.  The purpose of these emails is to induce the individuals to reveal personal information such as payment card details, bank account numbers and personal security data.  Phishing emails usually appear to have been sent from financial institutions and instruct the recipient to follow a link to a fraudulent website which requests personal and financial information be inputted.

Vishing or Voice Phishing is the criminal practice of using social engineering techniques over the phone in order to obtain the personal, financial or security data from individuals.  Social engineering can be described as human to human interaction which attempts to exploit vulnerabilities in human nature in an attempt to obtain personal information.

Smishing or SMS Phishing is a phishing attack whereby a mobile phone user receives an SMS (text) message which purports to have been sent from a genuine business or individual.  This message attempts to induce the recipient to follow a link to a website which appears to be legitimate but in under the control of the criminal organisation.  This website then requests personal and financial information to be inputted.

BPFI joins Horizon 2020 Infinitech Project

BPFI have successfully applied to become part of the Horizon 2020 INFINITECH project, a flagship EU initiative for Big Data in Finance and Insurance. A total of 42 partners from 16 countries will develop 14 high-impact research pilots over the three years of the project. Within the project, BPFI, Bank of Ireland and NUIG will collaborate to develop a testbed for AI-based support tools for Credit Scoring, AML, and KYC based on data sharing.

The project kicked-off in November and was attended by over 70 participants from across Europe.

Four out of five Irish adults have savings accounts

Some four out of five (83%) Irish adults have a bank, credit union or post office savings account, according to a national survey commission by Banking & Payments Federation Ireland (BPFI). Some 46% of adults have a regular savings account, 46% have an account for occasional savings and 18% have a lump sum on deposit.

Among the 17% who do not have a savings account, most (77%) said they did not have money to save. Generation Z (18-24 year olds) were least likely to be saving.

While reasons for saving vary across individuals, two-thirds (66%) of Irish adults say they save for a rainy day, 36% are saving for a holiday, 31% are saving for their children’s future needs or education and a quarter are saving for Christmas or to pay large household bills. (Respondents could select more than one reason for saving.)

Regional differences
The survey also shows that saving habits vary by age and region. A higher proportion of those living in Dublin (88%) have savings accounts compared to the rest of Leinster (82%), Munster (82%) and Connacht/Ulster (75%).  While saving for a rainy day was the main reason cited for saving in most parts of the country, some variation was evident with 59% of those in Dublin saving for a rainy day compared to 69% in the Rest of Leinster, 70% in Munster and 65% in Connacht/Ulster.

Life stage variations

Variances were also evident in savings habits across different life stages.  When asked for the top three reason for saving:

  • Generation Z (18-24-year-olds) are focused more on short or medium-term needs such as a car or holidays
  • Many millennials (25-37-year-olds) are trying to build up a deposit for a house
  • Most Generation Xers (38-53-year-olds) have children so they’re saving for their future needs
  • Baby boomers (55+) are most focussed on precautionary savings and planning for big household bills

Speaking about survey results, Brian Hayes, Chief Executive, BPFI said:

“They survey presents some interesting findings both in terms of the age and the geographical differences it highlights. However, essentially it points to the fact that, in the main, Irish adults have developed good savings habits, even at a relatively early age. And even though variances exist in terms of the reasons why people are saving at various stages in their lives, it’s very encouraging to see that rainy day saving is a key priority across most age profiles.”

 

BPFI’s Support for Climate Action Week

BPFI were delighted to participate in Climate Finance Week, which demonstrated the growing importance of the sustainable finance agenda. As part of the week-long schedule of events BPFI were involved in a number of events and initiatives.

In tandem with a number of financial services representative groups, BPFI signed the Sustainable Finance National Statement of Intent on ESG Day.  Coordinated by Sustainable National Ireland this initiative aims to contribute towards promoting and developing sustainable financing in Ireland.

In addition BPFI and its affiliate the Fintech and Payments Association of Ireland (FPAI) hosted a Sustainable Innovation event with the support of Sustainable Nation Ireland. The event explored the possibilities for fintech and financial service companies to work together as they adapt their business models to the realities of climate action. Stephen Nolan, CEO, Sustainable Nation, noted that Ireland is well placed to build the bridge between financial knowledge and ESG knowledge.

Climate Week also saw the publication of the Sustainable Finance Skillsnet Report into sustainable finance skills required in Ireland which was prepared by Deloitte with help from BPFI and other financial services industry bodies. The survey, to which many BPFI members inputted, is a baseline survey and will be repeated on an annual basis. The report makes a number of suggestions regarding upskilling, including layering on top of existing skills training and the need to find experts to do the training. BPFI plan to discuss the recommendations with our members.

 

Mortgage Switching More Prevalent Than Many Realise, says BPFI

Mortgage switching activity by borrowers from one lender to another is at levels last seen in the mid-2000s before the financial crisis, according to an analysis by Banking & Payments Federation Ireland (BPFI) of mortgages drawn down by borrowers since 2003.

Cumulatively since 2003 when data compilation commenced, 159,592 borrowers have switched from one mortgage lender to another.  While the bulk of these took place during the years before the financial crisis, it illustrates the capacity of the banking system to facilitate switching in response to consumer demand.

Taking the number of re-mortgages (switches) as a % of all mortgages drawn down in Q3 of each year over the last 17 years*, the BPFI analysis shows the following: while switching activity varies over time, it has been generally increasing over recent years and returning to levels last seen before the financial crisis:

Year     Mortgage Switching as % of Mortgage Drawdowns

2003      8.8%
2004      10.9%
2005      13.1%
2006      12.8%
2007      17.4%
2008      17.5%
2009      13.1%
2010       8.0%
2011       6.5%
2012       2.7%
2013      1.7%
2014      2.0%
2015      4.6%
2016      8.3%
2017      8.2%
2018      13.1%
2019      12.1%

The analysis shows that mortgage switching activity reached a peak in the 2007-08 period, fell to a low of 1.7% in 2013 and has rebounded to in excess of 12% today.  This indicates a broadly positive trend: namely, a significant recovery – albeit from relatively low levels – in the level of switching towards the historically highest level that prevailed around 2008.

In addition to switching between lenders, borrowers will now find it easier to switch mortgage product with their existing lender.  Since January 2019 mortgage lenders are required to:

  • Tell the borrower about cheaper options 60 days before s/he comes out of a fixed rate mortgage
  • Tell the borrower if s/he can switch to a cheaper mortgage based on how much equity is in the home
  • Clearly explain the pros and cons of any mortgage incentives such as cashback offers
  • Give the borrower a comparison of how much the existing mortgage costs versus other options offered by the lender if s/he asks for one
  • Give switchers all the information they need to switch, including how long it will take
  • Give the borrower a decision within ten business days of receiving a completed mortgage application.

While encouraging borrowers to consider switching in line with their particular requirements, BPFI points out that mortgage switching between lenders is not without its remaining challenges:

  • Credit assessment: where the switch is from one institution to another, the lender to which the mortgage is being switched will likely want to undertake its own credit assessment independent of that undertaken by the original lender
  • Legal costs: the switcher will likely incur costs for legal services related to the switch.

BPFI CEO, Brian Hayes, states:

“Mortgage switching will not be for everyone: some 41% of borrowers have tracker mortgages with very attractive rates; while some 81% of all new PDH lending is at fixed rates.  This reality limits the scope for switching activity.  However, for other borrowers switching may well be rewarding and we would encourage them to consider their options.  Switching is an important competitive dynamic in the marketplace. The perceived level of switching activity in itself could be said to be an influencing factor on the borrower’s decision on whether or not to switch: the higher the perceived level of switching, the more comfortable borrowers generally will likely be with the concept of switching.  It’s therefore important that the existing effective level of mortgage switching is clearly and fully understood.”

Banking and business bodies join forces to promote financial literacy across SME sector

The leading representative bodies for banks and SMEs recently joined forces behind the promotion of a free online learning tool, www.dolearnfinance.com  to help the owners/managers of start-up, micro and small businesses to improve their financial management skills.

BPFI, Chambers Ireland, Dublin Chamber of Commerce, Irish Small & Medium Sized Enterprises Association (ISME), Microfinance Ireland and the Small Firms Association (SFA) are at one in recognising the importance and value of promoting higher standards of financial literacy across the SME sector.  They share a common position: building and minding the business on a day-to-day basis is crucial and understandably time-consuming for entrepreneurs; but this must also include understanding the overall financial performance of the business and the levers that affect its performance.

Using various resources and practical business examples, the www.dolearnfinance.com tool enables SME owners/managers to gain a greater understanding of the most common financial terms and concepts and simple financial techniques in a user-friendly way, thus helping them to better manage their businesses.

Each of the supporting organisations are committed to promoting awareness and usage of the online tool through their online and offline communications, training and information programmes.

Launching the joint initiative, the Minister for Enterprise, Business and Innovation, Heather Humphreys TD, stated: “In the coming weeks, I will be launching a new SME and Entrepreneurship strategy for Ireland under Future Jobs Ireland. One of the key focuses of the strategy will be stepping up financial skills and knowledge among SMEs, as well as increasing the take-up of guarantee schemes. I welcome the launch of DoLearnFinance as a step in the right direction and would like to commend the partners involved.”

Brian Hayes, Chief Executive, BPFI:

“SMEs are central to the welfare of the national economy and local communities, which is why a productive bank-SME relationship is so very important. Higher standards of financial literacy will enable SMEs to get the most out of that relationship.  This collective support for DoLearnFinance is firmly in line with the recommendation of the recent OECD report, ‘SME and Entrepreneurship Policy in Ireland’ which calls for more financial education to strengthen the financial skills and financial management of small business owners and managers.”

Ian Talbot, Chief Executive, Chambers Ireland:

“Tools such as this are essential in supporting SMEs to improve their financial literacy. Improving the competitiveness and productivity of SMEs is crucial, especially in light of the increasingly difficult trading conditions that Brexit is likely to bring. Better financial literacy will go a long way in achieving this aim,”

Mary Rose Burke, Chief Executive, Dublin Chamber of Commerce:

“Good financial skills for business leaders, particularly those with non-financial backgrounds, are a prerequisite for enhancing the resilience of SMEs. A solid grounding in finance is hugely important when it comes to making the right investment and management decisions, helping small firms to grow, innovate and improve productivity”.

Garrett Stokes, Chief Executive, Microfinance Ireland:

“Weak financial literacy is a problem Microfinance Ireland experiences on a daily basis with many microenterprises across Ireland. Assisting them to improve their financial skills will enable these important indigenous businesses: internally with the management of all aspects of their business, improving their viability and growth; and externally when seeking investor or loan finance.”

Sven Spollen-Behrens, Director SFA:

“With the financial world becoming increasingly complex, there is a compelling need for small business owners to improve their financial knowledge and skills. The SFA and its partners are committed to addressing this issue and will continue to work towards raising financial literacy amongst small businesses.”

Jack Foley, Chief Executive of DoLearnFinance

“Our vision is to help create an environment where no small business fails, or fails to reach its potential, because of a gap in financial skills that can be remedied with minimal time and effort.”

BPFI-MABS agreement to facilitate borrower-lender engagement

A BPFI-MABS Framework Agreement to help resolve cases of late stage mortgage arrears has been updated and recently published BPFI.  Significantly the Agreement is now also supported by leading Credit Servicing Firms as well as banks. The BPFI-MABS Framework Agreement for Late-Stage Mortgage Arrears provides for how MABS Dedicated Mortgage Arrears Advisers and lenders can work together to try resolve mortgage arrears for those borrowers who have already exhausted the Central Bank’s Mortgage Arrears Resolution Process (MARP) and are entering or are about to enter the legal process.

When initially developed by BPFI and MABS in 2017, the Agreement principally covered the country’s main banks who, as BPFI member institutions, were happy to support it.  The list of supporting institutions has now been expanded to include the leading Credit Servicing Firms who are also happy to support it.

In addition, a new consumer information leaflet, Protections if your mortgage is sold to a third party, has been published to accompany the Framework Agreement.  Among other points, this makes clear that, where a mortgage is sold by a bank to a third party, that party must appoint a credit servicing firm to manage it and the protections afforded by the Central Bank’s Code of Conduct on Mortgage Arrears still apply.

BPFI and Safeguarding Ireland launch awareness campaign on financial abuse

BPFI together with Safeguarding Ireland has launched a public awareness campaign to highlight the real risks of financial abuse and encourage adults to better plan ahead to safeguard their finances. BPFI commissioned new research for the campaign which shows that 20% of Irish adults have experience of financial abuse however many older adults still do not think that it could happen to them. The weeklong campaign includes a number of elements including media and social media outreach as well as a radio and digital advertising campaign. The campaign is also highlighting BPFI’s information booklet Safeguarding your Money Now and in the Future which can be found on www.safeguardyourmoney.ie a page set up specifically for the campaign.

Separately BPFI and its members recently attended a roundtable discussion on the subject of banking regulations and how to support the rights of persons with disabilities held by the Institute of Bankers and Safeguarding Ireland. Presentations from attendees provided insights into the challenges and benefits of new legislation and around approaches taken to vulnerable customers.

The comments provided by BPFI members demonstrated their dedication to best practice with regards to vulnerable customers and their efforts to train staff and put in place empathetic policies. BPFI CEO Brian Hayes provided a brief outline of BPFI activities in this area, including the BPFI Guide to Safeguarding your Money, a customer and advocate guide which gives helpful tips for customers to protect their money and which raises awareness of financial abuse, and the positive findings of the independent UCD research, which indicated widespread awareness and competence within the banking sector and a strong willingness on the part of staff to assist and protect the customer.