Mortgage approval rate continues to rise

The number of mortgages being approved remains on an upward trend amid a softening of the Central Bank’s lending rules and following the Government’s help-to-buy scheme for first-time buyers.

Data published by the Banking and Payments Federation (BPFI) show the value of mortgage approvals in October grew by 29 per cent year on year. This follows strong growth in both September (40 per cent) and August (55 per cent) and brings the growth rate over the past three months to a new high of nearly 41 per cent.

The federation’s latest numbers show the value of approvals for house purchase in the three months to October grew by 37 per cent, with the number of approvals growing and the average loan size increasing.

First-time buyers continue to account for the largest share of approvals, but approvals for movers are now growing at a faster pace, the figures show.

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In the three months to October, the value of approvals for movers grew by 43 per cent year-on-year while approvals for first-time buyers grew by 34 per cent over the same period.

The fastest growing component of mortgage approvals continues to be re-mortgaging which is up 89 per cent on the same quarter last year. The category now accounts for 10 per cent of approvals, up from 7 per cent a year ago.

Goodbody analyst Dermot O’Leary said both the Government’s scheme and the Central Bank’s loosening of the rules would bolster demand.

“Both of these policy developments will support mortgage demand,” he said, while noting that mortgage demand was already picking up in advance of these policy developments.

He said the brokerage was forecasting new lending growth of 19 per cent in 2017.