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More challenging period ahead as mortgage market activity looks set to be impacted by Covid-19 crisis

6th May 2020

Mortgage approvals already tapering over the past 12 months due to affordability issues

Banking & Payments Federation Ireland (BPFI) has today published the latest figures from the BPFI Mortgage Drawdowns Report for Q1 2020 and BPFI Mortgage Approvals Report for March 2020.

The following are the key figures from the Mortgage Drawdowns Report for Q1 2020:

  • 8,728 new mortgages to the value of €1,996 million were drawn down by borrowers during the first quarter of 2020.
  • This represents an increase 1.8% in volume and 6% in value on the corresponding first quarter of 2019.
  • A comparison with the previous quarter (Q4 2019) shows a fall of 28.8% in volume and 27.9% in value but it should be noted that Q1 is typically the weakest quarter in any year and Q4 is the strongest.
  • First-time buyers (FTBs) remained the single largest segment by volume (50.4%) and by value (50.8%).

 

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

  • A total of 3,733 mortgages were approved in March 2020 – some 1,946 were for FTBs (52.1% of total volume) while mover purchasers accounted for 970 (26%).
  • The number of mortgages approved rose by 6.2% month-on-month but fell by 9.9% compared with the same period last year.
  • Mortgages approved in March 2020 were valued at €879 million – of which FTBs accounted for €463 million (52.7%) and €260 million by mover purchasers (29.5%).
  • The value of mortgage approvals rose by 6.5% month-on-month but fell by 4.5% year-on-year.

Speaking on the publication of the data, Brian Hayes, Chief Executive, BPFI said: “The latest figures from BPFI’s mortgage approvals and drawdown reports are broadly in line with what we would have expected to see in a pre-Covid landscape with the approvals figures in particular reflecting a tapering off in the mortgage market over the past 12 months due to the growing affordability challenge we have seen for buyers.”

“Looking ahead, there is no doubt that the period ahead is going to be challenging for the mortgage market and the housing market as a whole, given the changing conditions in the economy and its direct impact on incomes and employment.”

The BPFI Chief Executive said: “We expect to see the first effects of Covid-19 on the mortgage market coming through in April’s mortgage approvals figures which will be published at the end of May. The change in individuals’ financial and employment circumstances will have an impact on mortgage approvals, with banks taking a pragmatic and responsible assessment of all applications from both a borrower and lender perspective. Taking out a mortgage is a major undertaking for borrowers, and no lender wants to see a borrower under distress or difficulty, especially in these highly uncertain times.”

“As we navigate our way through these unprecedented times it will be necessary for both lenders and borrowers to take a realistic and pragmatic approach until such time as we have more clarity on the wider impact of the pandemic as a whole”, added Mr. Hayes

Commenting on the drawdown figures, Mr. Hayes said: “The drawdown data for the first quarter of 2020 shows an increase in both volume and value on the same period last year. The fall that has been recorded on a quarter-on-quarter basis is not surprising and reflects the seasonal nature we generally see at this time of year with Q1 typically the weakest quarter in any year and Q4 the strongest. This accounts for the fall in value and volume recorded in Q1 this year compared to the fourth quarter of 2019.”

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

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