Mortgage market buoyant as drawdowns and approvals rise

Mortgage activity – approvals and drawdowns – remained strong in the first quarter for 2021 despite restrictions to contain the coronavirus.

Figures from the Banking and Payments Federation Ireland (BPFI) show there were 9,091 new mortgages worth €2.1 billion drawn down by borrowers during the first three months of the year.

While this was down on the 12,154 seen in the previous quarter, it was the highest volume of drawdowns seen in the first quarter of any year since 2009.

Activity in the property market continues to defy predictions with prices, transactions and mortgage activity up on pre-Covid levels.

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The latest BPFI data show first-time buyers accounted for 52 per cent of the drawdowns in the first quarter. However, new properties, including self-builds, accounted for just 23 per cent of the mortgages, reflecting the disruption to construction.

The BPFI also published separate mortgage approval figures, which show a total of 4,324 mortgages were approved in March, up 18 per cent on the previous month.

"Our latest mortgage drawdowns and approvals data for Q1 [first quarter] 2021 is showing a very strong performance considering that Level 5 Covid restrictions were in place for the entire first quarter of this year," said BPFI chief executive Brian Hayes.

“ This is in contrast to the same period last year when the market was functioning as per normal as Covid restrictions really only came into effect at the end of March 2020,” he said.

Mr Hayes continued: “Interestingly, where we have seen the impact of Covid restrictions is on the types of properties on which mortgages are being drawn down, with new properties (including self-builds) accounting for only 23.2 per cent of property purchase/build mortgages in Q1 2021, down from 28.5 per cent a year earlier and the smallest share since Q4 2016.

“Looking more in depth, we can see the number of mover purchase mortgages on new properties fell by 28.8 per cent year-on-year, while the volume of mortgages on second-hand properties rose by 11.3 per cent,” he said.

“This points to the severe limitations we have seen on the construction industry over the last 12 months which is having a clear impact on supply,” Mr Hayes added.

“With all residential construction now under way again, the challenge remains how to address the strong demand for housing, clearly evident in today’s figures, with the continued pressure which has been growing on supply,” he said