Latest BPFI figures show unsurprising reduction in mortgage drawdowns in Q2 2020, however mortgage approvals show monthly rise

Future trends difficult to predict with normal seasonal trends disrupted by Covid-19

 30th July 2020 – Banking & Payments Federation Ireland (BPFI) has today published the latest figures from the BPFI Mortgage Drawdowns Report for Q2 2020 and BPFI Mortgage Approvals Report for June 2020.

The following are the key figures from the Mortgage Drawdowns Report for Q2 2020:

  • 6,622 new mortgages to the value of €1,462 million were drawn down by borrowers during the second quarter of 2020.
  • This represents a fall of 34.8% in volume and 35% in value on the corresponding second quarter of 2019.
  • A comparison with the previous quarter (Q1 2020) shows a fall of 24.1% in volume and 26.7% in value.
  • First-time buyers (FTBs) remained the single largest segment by volume (49.6%) and by value (50.3%).

In addition, BPFI also published today the latest figures from the BPFI Mortgage Approvals Report for June 2020. The following are the key elements:

  • A total of 2,263 mortgages were approved in June 2020 – some 1,059 were for FTBs (46.8%) of total volume) while mover purchasers accounted for 557 (24.6%).
  • The number of mortgages approved in June rose by 20.4% month-on-month but fell by 49.5% compared with the same period last year.
  • Mortgages approved in June 2020 were valued at €536 million – of which FTBs accounted for €253 million (47.2%) and €149 million by mover purchasers (27.8%).
  • The value of mortgage approvals rose by 21.3% month-on-month but fell by 48% year-on-year.

Speaking on the publication of the data, Brian Hayes, Chief Executive, BPFI said: “This latest set of figures shows that mortgage drawdowns have held up relatively well in the second quarter of this year despite the overall downward trend and scale of disruption to the economy. In the current volatile environment, we do not expect the market to follow the normal seasonal patterns so the rest of the year will be difficult to predict. However, it is likely we may see a bigger Covid-19 impact in our next set of quarterly drawdown figures due to the time lag between mortgage applications, approvals and drawdowns”.

“Looking at the approvals figures for June, while the year-on-year figure was well down, almost 50% on this time last year, activity in June did see a 20% increase on May. The increase indicates a level of resilience and robustness in the market which has been bolstered by the removal of some Covid-19 restrictions since mid-May. However, any indications of a recovery need to be treated with caution as it is early days in the economic journey.

“Overall, our message is that lenders are continuing to approve new mortgage applications and consumers should actively proceed with mortgage applications where their incomes and employment circumstances have not been impacted by the current pandemic and where they meet the normal lending criteria ”, said Mr. Hayes.

The BPFI Mortgage Drawdowns and Mortgage Approvals reports 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

Sharp decline in cheque usage with 45% falloff since 2016 as consumers adopt electronic payments

Some 6.6 million cheque payments in Q1 2020, down 15% on same period last year and down 45% since 2016

The latest figures from Banking & Payments Federation Ireland (BPFI) show that cheque usage continued to decline in Q1 2020 with only 6.6 million cheque payments, down from 7.8 million (-15%) in Q1 2019 and 12 million (-45%)in the first quarter of 2016[1].

Cheque usage has declined in recent years as both business and consumers move to electronic payments. Consumers, in particular, rely heavily on cards to pay for their shopping both online and in the store, while they mainly use direct debits to pay their regular bills such as electricity, TV or phone.

A recent consumer survey commissioned by BPFI[2] showed that only 2% of consumers prefer to pay a bill or a friend by cheque while only 4% prefer to donate to charity by cheque.

Ireland is now one of only a handful of countries worldwide where cheques are still regularly used, including Canada, Cyprus, France, Portugal, Singapore, the UK and the US, based on figures from the European Central Bank and the Bank for International Settlements. Both Ireland and the UK have seen substantial falls in cheque usage in the past decade, with Irish cheque usage per capita down from 22.1 in 2009 to 6.4 in 2019.

Sources: BPFI, UK Finance, CSO, ONS

 

Speaking about today’s figures, Gill Murphy, Head of Payment Schemes, BPFI said: “Given the fast-changing nature of consumer preferences away from cheques and towards electronic transfers, cards and mobile banking, today’s figures are not a surprise. This continued drop in cheque usage by consumers is a trend we expect to see continue as consumers and businesses are provided with more choice and convenience regarding payment methods. At the same time however 6.6 million cheque payments this quarter is not insignificant and demonstrates that some consumers and smaller businesses in particular are still in no rush to shred their chequebooks just yet, the challenge for us is to try to ensure that there is a full awareness of what the alternative options are and the potential benefits of those options for both consumers and businesses.”

 

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.

[1] BPFI’s current quarterly data series on cheques starts in Q1 2016

[2] Banking & Payments Federation Ireland: Consumer Payments Research Report May 2020

Implementation of Strong Customer Authentication under PSD2 Webinar

BPFI is delighted to host a two part lunchtime webinar on the Implementation of Strong Customer Authentication under PSD2 on Wednesday 22nd and Thursday 23rd July from 1.00pm – 2.00pm.

Hear from our team of experts on areas such as ‘What is Strong Customer Authentication?’, ‘How should it be implemented?’ and ‘What does it mean for your business?’

Hosted by Gill Murphy, Head of Payment Schemes, BPFI, speakers and topics include:

Day One

  • Kevin O’Brien, Head of Division, Consumer Protection, Central Bank of Ireland will open and provide us with an overview of the Strong Customer Authentication framework, the importance of its implementation and the role of the Central Bank in this regard
  • John O’Donoghue, Senior Compliance Manager, Avantcard.  An experienced card issuing expert will share insights into how and when Strong Customer Authentication will be required and the implications of not being able to support it
  • Brian Gaynor, Executive Director, Products Solutions, JP Morgan. Hear how the implementation should be managed. What do you need to do?  What support is available to you?   What technical challenges will you face?

Day Two

  • Caroline Drolet, Head of SCA Optimisation  & Caroline Birchinall, Head Authentication Solutions, VISA, will provide us valuable insights as to ‘How Merchants can optimise SCA’
  • Michael Sass, VP Security Solutions, Europe, Mastercard, will explain EMV 3DS App authentications and provide us with suggested actions to help and support your preparation for PSD2

An interactive Questions and Answers session will be held at the end of Day Two with our speakers. So please forward your questions in advance to: Payments@bpfi.ie

Date: Wednesday, 22nd & Thursday 23rd July 2020
Time: 1.00pm BST
Duration: 1 hour

Future of Banking Environment Webinar

The final webinar in the BPFI/Deloitte Lunchtime series, ‘Future of Banking Environment‘ is taking place on Wednesday, 15th July  from 1.00pm – 2.00pm.

With interest rates likely to remain at historically low levels and the cost of capital still stubbornly high, how will banks address long term sustainable profitability? Will the recent large declines in U.S. and European bank equity prices mean that investors will become concerned about the prospects of the banking sector? As banks are now arguably undervalued, is further consolidation on the cards? We will address these and other systemically important questions as the banking environment looks set to accelerate into a period of unprecedented financial, technological and structural change.

The keynote address will be delivered by Margaret Doyle, Partner, and Head of Financial Services and Real Estate Research, Deloitte UK.

She will be joined for a panel discussion by our experts below;

  • Moderator: Sean Smith, Partner, Risk & Regulation, Deloitte
  • John O’Beirne, Director of Products, Bank of Ireland
  • Diarmaid Sheridan, Research Analyst, Davy

Date: Wednesday, 15 July 2020
Time: 1.00pm BST
Duration: 60 minutes

BPFI statement on payment breaks and accrued interest

Ireland one of only 10 EU Member States to offer payment breaks to mortgage customers

In a comprehensive statement issued today by Banking & Payments Federation (BPFI), BPFI Chief Executive Brian Hayes has stated “The Irish payment break moratoria including the accrual of interest is, always has been and remains fully in line with EBA Guidance.”

He said the compliance of the Irish moratoria has been confirmed by the Central Bank of Ireland (CBI) to the European Banking Authority, to the Oireachtas Committee and in a letter to the CEOs of all lenders published on 8 June*. “BPFI, together with industry have worked closely with the Central Bank of Ireland on the Payment Break and will continue to do so.”

Mr. Hayes today stressed that the industry Payment Break in Ireland remains as originally and consistently communicated to customers, in good faith, from the outset of the Covid-19 Payment Break announcement in mid-March.

Consistency and transparency with customers

Mr. Hayes said the industry wide payment breaks is one of the most wide-ranging private sector moratoria made available in Europe in terms of the scope of products included and its availability to all customers impacted by COVID 19. “Irish lenders moved rapidly in March to make the Payment Break available to any customer impacted by COVID 19 and adhered to long-established precedents on payment breaks and interest, precedents which were reinforced through EBA COVID 19 specific guidance on 2 April. Lenders have been consistent, transparent and upfront regarding the costs associated with such a break and this approach is in line with CBI supervisory expectations published on 8 June 2020”, he added.

Mr Hayes said: “The Payment Break is offered on the same conditions as Payment Breaks in the past, and we believe that it is important that we have fairness of treatment across the board for past, present and future customers  wishing to avail of breaks.”

Ireland in line with Europe

Mr. Hayes said the approach by Irish lenders goes above and beyond the offering made in other European countries. According to the EBA, only 10 Member States offer moratorium to mortgage customers, of which Ireland is one. Moreover, the accrual of interest during the Payment Break is in line with other countries in Europe whose private banks have introduced payment breaks.

The BPFI CEO said:” There are two exceptions, Belgium, and Spain, where for a very specific, limited and legally defined cohort of customers interest does not accrue. Nonetheless, there are specific conditions attached to such concessions for those limited cohort of customers, while for other customers in those countries interest does actually accrue.”

Mr Hayes said: “Ireland was one of the first countries in Europe to offer payment breaks to customers unlike some major countries in Europe. The initiative is available for any customer impacted by COVID 19, including those that may be in arrears and applies to Personal, SME and Mortgage customers.

Mr Hayes refuted false allegations that the industry deliberately misinformed the Taoiseach during a meeting on 11 May on the accrued interest issue. He said that Irish lenders have been clear and upfront in outlining the type of payment breaks available to customers and how they would apply in line with EBA Guidance published on April 2nd.

Mr Hayes also rejected any claim that banks are profiteering from Covid-19 Payment Breaks. He said: “Retail banks in Ireland have already provided an extra €0.5 billion for future losses in their Q1 2020 updates. Retail banks in Ireland have provided more than 140,000 payment breaks for loans across various customer categories with mortgages accounting for 70,000 of these breaks comprising mortgage breaks. There is an acceptance that many people may not be able to meet their repayments in the months ahead and that there will be considerable losses to the banks”.

BPFI and its Members understand that some customers may experience financial difficulties and distress even when the Government Measures are lifted.,customers will remain the priority of the lenders, as has been the case from the very outset of the Payment Break offering in Mid-March.

We appreciate that many customers are under pressure and financial stress and where a customer requires, banks will work with customers on appropriate solutions in line with a customer’s individual circumstances when the payment break period ends.

ENDS/

*CBI Dear CEO Letter, 8 June 2020

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 Payments Webinar

The third in the BPFI/Deloitte Lunchtime webinar series, ‘Future of Payments‘ is taking place on Wednesday, 8th July  from 1.00pm – 1.45pm.

The COVID-19 crisis has greatly accelerated the pace of change in payment behaviours that had already started several years ago. During the crisis the use of cash plummeted, contactless payments rocketed, and High St commerce collapsed while online flourished. Much of this change will be short lived and revert as the crisis lifts, but much will not.

Our keynote speaker Gill Murphy, Head of Payment Schemes, Banking & Payments Federation Ireland (BPFI)  will share her thoughts on the new world of payments and what it could look like.

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

  • Moderator: Sean Smith, Partner, Risk & Regulation, Deloitte
  • Gary Conroy, Chief Product Officer, TransferMate Global Payments
  • Sam Hinton-Smith, Public Policy Lead Ireland, Stripe
  • Matt Ryan, Director Financial Services, Deloitte

Date: Wednesday, 08 July 2020
Time: 1.00pm BST
Duration: 45 minutes