Mortgage approvals rise 23% in April

Latest figures from Irish Bankers’ Federation indicate renewed activity in mortgage market

 

New mortgage approvals rose by nearly 23 per cent in April compared with the previous month, according to the last figures from the Irish Bankers’ Federation (IBF).

A total of 1,433 mortgage with a combined value of €240 million were approved by lenders during the month.

The IBF’s mortgage approvals report indicated the vast majority (91 per cent) of approvals were for house purchase.

This segment of the market grew by 23 per cent in April on the previous month, and by 11.8 per cent on an annual basis.

With the total value of mortgage approvals for house purchases standing at €226 million in April, the average mortgage approval value for the purposes of house purchase was €167,418 - up 2.2 per cent on the same period last year.

The IBF’s director of public affairs, Felix O’Regan, said: “The increase in the number of new mortgage approvals recorded in April is welcome evidence of renewed activity in the mortgage market, a pattern which first emerged during the latter part of last year.”

“Following a more recent slowdown in activity in the first quarter of this year - due to seasonal factors and the expiration of mortgage interest relief - the latest approvals figures provide a firm indication of underlying growth in the market.”

Piba, the umbrella group which represents financial brokers, however, said the figures were “no cause for celebration”.

“Firstly it’s worth remembering that mortgage lending has dropped 95 per cent from peak. Secondly the figures are for approvals and the suspicion is that there may be quite a gap between approvals and drawdown,” Piba’s Rachel Doyle said.

“There is huge unmet need with the biggest impediment being a lack of lending. It is our experience that there has been a slight easing in the system of late and the April figure is likely to represent a further small improvement. However, it is not going even close to meeting current demand,” she said.

She said demand is being driven primarily by people believing that property prices are close to the bottom of the market (61 per cent) and the fact that it is as cheap to buy as rent (20 per cent).

“However, the biggest impediment to these people is the unnecessarily stringent conditions being imposed by lenders on people who do have the capacity to repay loans.”

Data collection for the IBF Mortgage Approvals Report began in August 2012 covering the period from January 2011.

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