Mortgage approvals down in May

Almost 1,900 mortgages worth €442 million approved despite severe restrictions and economic uncertainty

Banking & Payments Federation Ireland (BPFI) has today published the latest figures from the BPFI Mortgage Approvals Report for May 2020. The following are the key elements:

  • A total of 1,879 mortgages were approved in May 2020 – some 852 were for FTBs (45% of total volume) while mover purchasers accounted for 424 (23%).
  • The number of mortgages approved fell by 14.6% month-on-month and fell by 61.9% compared with the same period last year.
  • Mortgages approved in May 2020 were valued at €442 million – of which FTBs accounted for €200 million (45%) and €118 million by mover purchasers (27%).
  • The value of mortgage approvals fell by 15.9% month-on-month fell by 61.1% year-on-year.

Speaking on the publication of the data, Brian Hayes, Chief Executive, BPFI said: “As expected we have seen a further fall off in mortgage approvals figures during May, down just over 14% in volume terms on April. This is not unexpected given the scale of the lockdown and physical restrictions, and their impact on employment figures and economic uncertainty. Similarly, the 60% fall in the volume of approvals when compared to May 2019 is not surprising given the scale of the pandemic and its immediate impact on incomes and business activity.

“However, even under the most severe restrictions when the majority of the country was still shut down and during what has been an unprecedented shock to both the Irish and global economy, it is significant that almost 1,900 mortgages valued at €442 million were approved here during the month of May. This shows that the demand within the housing market may be more resilient than expected and also demonstrates that banks are meeting this demand and continuing to approve new applications despite the challenges in the current environment.”

“Our strong message to would-be borrowers, whose income and employment circumstances have not been impacted by the current pandemic and who meet normal lending criteria, is to actively proceed with their applications,” said Mr. Hayes.

The BPFI Mortgage Approval Reports May 2020 can be viewed on the BPFI website here.

 

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: Jillian Heffernan, Head of Communications, jillian.heffernan@bpfi.ie 087 9016880

Future of Digital Banking Webinar

The second in the BPFI/Deloitte Lunchtime webinar series, ‘Future of Digital Banking‘ is taking place on Wednesday, 1st July  from 1.00pm – 1.45pm.

Banks are being fundamentally challenged to keep up in today’s increasingly digitally focused market. The drive to provide new re-imagined products and the type of simple and insight-driven experiences that today’s digitally savvy customers expect, will only accelerate.

Our key note speaker, David Conway, Partner Lead for Customer & Marketing at Deloitte, will explore the rise of the challenger banks who are rapidly gaining traction, unencumbered by the constraints of legacy business models and core systems, and how the established high street banks are fighting back.

We will then be joined by our panel of experts below;

  • Moderator: David Dalton, Partner, Head of Financial Services, Deloitte
  • Joe Heneghan, Chief Executive Officer – Ireland, Revolut  
  • Conor McAleavey, Head of Innovation, Leveris
  • David Conway, Partner Lead for Customer & Marketing at Deloitte

Date: Wednesday, 01 July 2020
Time: 1.00pm BST
Duration: 45 minutes

Strong recovery in contactless payments as spending hits €600 million in May – highest monthly total in 2020

More than €19m worth of contactless per day in May

The latest figures from Banking & Payments Federation Ireland (BPFI) show a strong recovery in the value of contactless payments in May as spending reached almost €600 million, the highest monthly total to date.

On average consumers made €19.3 million worth of contactless payments per day during May up 7% on figures in February before COVID-19 hit. In volume terms contactless payment usage was 1.25 million, down from 1.51 million ‘taps’ per day in February.  While this is unexpected due to the lockdown and restrictions on movement during March through to mid-May, overall the figures indicate  that consumers are spending more than before through contactless payments with the May figures accounting for the highest value on record this year.

With the contactless limit increased to €50 during April in response to the COVID-19 crisis, the figures also show an increase in the average contactless transaction which reached €15.30 in May, up from €11.92 in February.

Speaking on the latest figures, Brian Hayes, Chief Executive BPFI said: “Now more than ever before consumers want fast, simple and secure payments and this is very much reflected in today’s figures which are showing a strong recovery in the values of contactless payments for May. It is likely this growth is in part a result of the increase in the contactless limit to €50, a significant undertaking at the time by BPFI members who worked hard deliver this in collaboration with a number of parties.”

“The volume of contactless payments were down in May when compared to February before COVID-19 hit, however this must be seen in the context of the restrictions which only started to ease during the second half of May. With the recent acceleration of the reopening roadmap and the resulting uplift which has been seen in retail and hospitality spending in particular, we would expect that contactless volumes should show a recovery in the months ahead as more restrictions are lifted.  This is further supported by research carried out by BPFI recently which shows that 92% of all adults have now used contactless payments with one third of adult using contactless as their preferred method of payment in cafes and over a quarter preferring contactless when grocery shopping.”

 

Contact: Jillian Heffernan, Head of Communications, 087 9016880 or jillian.heffernan@bpfi.ie

Notes: 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 some 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Banking industry confirms new 30 September deadline date for new payment break applications

Mortgage payment break applications now just 3% of what they were at the peak of Covid-19

Banking & Payments Federation Ireland (BPFI) Chief Executive Brian Hayes has welcomed the announcement by the EBA to extend the deadline date for new payment break applications to 30th September, however he said he expected the demand for such breaks to taper in the weeks ahead given the rapid fall in applications already seen by the industry in recent weeks following the lifting of Covid-19 restrictions and its impact on the economy and employment.

Mr. Hayes said: “The Payment Break offered by lenders has been a hugely significant measure throughout the Covid-19 crisis, a factor acknowledged by the EBA in their statement from Paris this morning. Our Members’ customer engagement teams stand ready to support their customers at this time.”

Commenting on the falling demand for mortgage payment breaks Mr. Hayes said: “Figures from across the sector this week indicate that demand for mortgage payment breaks is now just 3% of what it was at the peak of Covid-19, indicating a strong fall off in the demand for these breaks.”

“Our Members were receiving thousands of applications a day in the early stages of Covid-19 in March and April; however, we are seeing a significant reduction in demand, falling to just 30 applications a day in the case of some Members. The fall in demand is not unexpected given the gradual re-opening of the economy and the return to work amongst employees. Already we have seen a recent reduction of 100,000 or 17% decline in the number of employees receiving the pandemic unemployment payment (PUP) in a short period and the continued re-opening of sectors that had been most severely hit in the early stages of the Covid-19 pandemic”.

Mr Hayes encouraged those seeking advice or making a decision on an application to access the BPFI’s Comprehensive Guide to the COVID-19 Payment Break & Repayments at the BPFI website.

 

Contact: Jillian Heffernan, Head of Communications, 087 9016880 or jillian.heffernan@bpfi.ie

Notes: 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 some 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Future Role of Fintech Webinar

On Wednesday, 24th June, Banking and Payments Federation Ireland (BPFI), in association with Deloitte are holding the first in the series of their lunchtime webinars Future Role of Fintech, from 1.00pm – 1.45pm.

It seems that Fintech has been thrust to the forefront of the financial services industry as the sector grapples with the fallout of COVID-19. The widely held perception is that the pace of digitisation in financial services will increase and that opportunities abound for Fintechs who can respond quickly. But is that the case? What are those opportunities, and can they be realised quickly? What should the EU be doing to help, as it seeks submissions to its Fintech Action Plan? And what about Brexit, as the prospect of a no-deal scenario looms larger?

Join us and our panel of experts as we discuss the state of Fintech in these unique and turbulent times.

Our key note speaker is Jan Ceyssens, Head of the “Digital Finance” Unit in the Directorate General for Financial Stability, Financial Services and Capital Markets Union at the European Commission. He will then be joined by our panel of experts below;

  • Moderator: David Dalton, Partner, Head of Financial Services, Deloitte
  • Michael Concannon, Head of Strategy and Development, Fintech and Payments Association of Ireland (FPAI)
  • Kevin O’Neill, Global Head of Asset Management & Asset Servicing & EMEA Head of Sales, Fenergo
  • Ruth McCarthy, CEO, Fexco Corporate Payments

Date: Wednesday, 24 June 2020
Time: 1.00pm BST
Duration: 45 minutes

Severe impact to housing supply this year due to COVID-19, but demand may be more resilient amongst borrowers on typical home buyer incomes

  • First time buyers on incomes less than €50,000 accounted for just 17% of FTB drawdowns (2019)

  • Earners over €50,000 per annum account for just 14% of PUP payment recipients

The latest Housing Market Monitor Q1 2020 published today by Banking & Payments Federation Ireland (BPFI) shows that, restrictions imposed to halt the spread of Covid-19 will have a huge impact on housing supply this year however, demand may be more resilient amongst borrowers on typical home buyer incomes.

Providing his analysis of supply and demand in the housing market post-COVID, Dr Ali Ugur, Chief Economist, BPFI said: “Ireland’s housing supply is going to take a significant hit this year given that the construction sector stopped all activity between the end of March and mid-May as well as the fact that current activity is very much limited due to work practice restrictions as part of Covid-19 health measures.   Estimates before the current crisis for total housing completions in 2020 were between 24,000 to 26,000 units. Assuming that the sector could operate at 50% to 75% capacity for the rest of the year, we estimate total completions would be around 14,000 to 16,500 units in 2020 leaving a gap of between 10,000 and 12,000 units in total this year.”

“However, on the demand side, we feel this may hold up better due to the important role which income levels play in housing and mortgage demand. Looking at those in receipt of either the Pandemic Unemployment Payment (PUP) or the Temporary Wage Subsidy Scheme (TWSS) we can see that those in the highest income brackets have been impacted the least. Workers with average gross earnings of more than €950 weekly or about €50,000 per annum account for just 14% of those receiving the PUP payment and 21% of those participating in the TWSS scheme. Looking at these figures in the context of the mortgage market, it is earners in this same income bracket that account for the majority of those drawing down mortgages.”

Source: BPFI analysis based on data from the CSO, Revenue Commissioners and the Department of Employment and Social Protection. Note: Excludes Primary industries

 

Dr Ugur explained: “We know from previous analysis that First Time Buyers (FTBs) with incomes of less than €50,000 accounted for just 17% of the FTB drawdowns whereas customers with incomes less than €50,000 only accounted for 7% of the total drawdowns amongst mover purchasers in 2019. Given the significant and increasing share of FTBs in the Irish mortgage market, and income levels required to secure a mortgage, income losses during the pandemic may not have a significant effect on demand for mortgages from this cohort.”

“To summarise, while it is clear that the supply of new homes in 2020 will be less than what was estimated before the pandemic, it is also likely that demand for homes and mortgages may be lower than estimated due to uncertainty in the housing market and diminished consumer confidence. However, reduced demand due to lost or lower income levels is likely to depend on the pace of the wider economic recovery in 2020. Hence as both supply of, and demand for, housing will be impacted negatively due to COVID-19, it is likely that changes in average prices will reflect supply and demand imbalances in the short term.”

BPFI’s Housing Market Monitor draws on BPFI data as well as a range of other published research for its assessment of the current state of the housing market. The latest report for Q1 2020 can be found on the BPFI website here.

 

Notes: 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 some 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

The BPFI Housing Marking Monitor is published quarterly. In addition to presenting a unique range of loan-level data, 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.

Contact: Jillian Heffernan, Head of Communications, 087 9016880 or jillian.heffernan@bpfi.ie

Mortgage approvals down over 40% in April as impact of COVID-19 takes effect

Lenders continue to approve new mortgages with 2,200 mortgages to the value of €525m approved in April

Banking & Payments Federation Ireland (BPFI) has today published the latest figures from the BPFI Mortgage Approvals Report for April 2020. The following are the key elements:

  • A total of 2,200 mortgages were approved in April 2020 – some 1,034 were for FTBs (47% of total volume) while mover purchasers accounted for 528 (24%).
  • The number of mortgages approved fell by 41.1% month-on-month and fell by 46.5% compared with the same period last year.
  • Mortgages approved in April 2020 were valued at €525 million – of which FTBs accounted for €256 million (48.8%) and €135 million by mover purchasers (25.7%).
  • The value of mortgage approvals fell by 40.3% month-on-month fell by 43.6% year-on-year.

Speaking on the publication of the data, Brian Hayes, Chief Executive, BPFI said: “As expected we have seen a significant drop off in activity in the mortgage market in April as the medium term impact of COVID-19 takes effect. And in the current conditions it is likely that we will see a similar fall in mortgage drawdowns for this quarter as they follow the downward trend shown in today figures.

The BPFI CEO said: “Looking ahead there is no doubt that the period ahead will remain challenging for the mortgage market and the housing market as a whole as the current economic uncertainty continues. And during this period it will be necessary for both lenders and borrowers to take a realistic and pragmatic approach given the change in individuals’ financial and employment circumstances. This is ultimately in the best interest of the customer and to ensure that borrowers can afford the loans they take out.”

“However, it is equally important to note today that despite the challenges during these unprecedented times, both economically and due to physical restrictions, 2,200 mortgages to the value of €525 million were approved by lenders here during April. This highlights the fact that lenders are continuing to approve new applications and that would-be borrowers should actively proceed with mortgage applications where income and employment circumstances have not been impacted by the current pandemic and where they meet the normal lending criteria ”, said Mr. Hayes.

“If customers have any questions in relation to the impact of COVID on their mortgage application we would encourage them to talk to their lender or go to the BPFI website where they will find a detailed COVID-19 FAQ guide on mortgages which is available here”, concluded Mr. Hayes.

The BPFI Mortgage Approval Reports April 2020 can be viewed on the BPFI website here.

 

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: Jillian Heffernan, Head of Communications, jillian.heffernan@bpfi.ie 087 9016880