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Mortgage approvals continue to be driven by switching and first time buyers as market dynamics continue to change

4th September 2018

Banking & Payments Federation Ireland (BPFI) has published the latest figures from the BPFI Mortgage Approvals Report for July 2018 in addition to publishing its latest Housing Market Monitor report for Q2 2018.*

The following are the key elements from the latest mortgage approvals figures:

  • A total of 4,222 mortgages were approved in July 2018 – some 1,957 (46.4% of total volume) were for first-time buyers (FTBs) while mover purchasers accounted for 1,249 (29.6%).
  • The number of mortgages approved rose by 6.6% year-on-year and fell by 1.2% month-on-month.
  • Mortgages approved in July 2018 were valued at €931 million – of which FTBs accounted for €428 million (46.0%) and €328 million (35.2%) by mover purchasers.
  • The value of mortgage approvals rose by 8.6% year-on-year and fell by 3.2% month-on-month.

Re-mortgage/switching approvals rose on a year-on-year basis – by 71.5% in volume and by 73.6% in value terms.  While showing a small decline, First Time Buyers remain the single largest segment by volume (46.4%) and by value (46%).

The annualised volume of mortgage approvals reached 44,413 in the twelve months ending July 2018, marginally higher (0.59%) than the twelve months ending June 2018. The annualised value of approval rose by 0.75% to more than €9.8 billion.

The continued growth in overall mortgage volumes has been driven by switching (up 4.54%), while FTB volumes have fallen from 22,224 in the twelve months ending February 2018, to 21,878 in the twelve months ending in July 2018.

The BPFI Mortgage Approvals Report June 2018  as well as the time series data file is available on the BPFI website here.

BPFI has also published today the lastest edition of its Housing Market Monitor for Q2 2018.  This presents unique loan-level data on the mortgage market as well as housing market trends.

In his commentary accompanying the report, BPFI’s Chief Economist, Dr Ali Uğur, describes how there are now a range of new factors at play in the housing market which could have a significant bearing on both demand and supply. Chief amongst these includes an increase in competition for residential housing with home buyers now facing increasing competition from non-households such as local authorities for new and second hand homes.

Writing  on this development,  Ali Uğur explained: “Whereas private house hunters are well accustomed to having to compete with one another for their home, the most recent trends indicate that they are now increasingly having to also compete with non-household purchasers such as local authorities.  In the twelve months ending June 2018, some 22% of market-based sales of new residential property were made to non-households: the figures show that local authorities alone acquired almost 2,900 houses in the past two years and built about 1,300 properties over the same period.  With non-households also buying second hand properties, private purchasers face significant competition for the limited supply of housing coming onto the market.”

In his commentary, Dr Uğur also highlights the increase in cost pressures as new building expands with construction prices due to reach by the end of this year levels close to when prices peaked in 2007 : “The Tender Price Index published by the Society of Chartered Surveyors Ireland (SCSI) shows that construction tender prices are continuing to rise and increased by 3.95% in the first half of 2018. It is estimated that full year increase in the index will be around 7.4% which will bring construction prices back to the level they were at in the first half of 2006 and just five index points below what they were when prices peaked in the first half of 2007. The major reasons cited by SCSI members for the continuing increase in tender prices are increasing workload coupled with skills shortages as well as increasing cost of labour and materials.”

The Housing Market Monitor is available on BPFI’s website here.

 

[*] 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 over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

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 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, jillian.heffernan@bpfi.ie 087 9016880

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