First rise since 2006 in new mortgage loan numbers
THE NUMBER of new mortgage loans issued during the second quarter rose on a year-on-year basis, the first time this has happened since early 2006.
The IBF/PwC Mortgage Market Profile reveals that a total of 3,225 new mortgages to the value of €524 million were issued during the quarter, up 22 per cent on the preceding three months.
While the number of total mortgages issued was down 9.2 per cent, both the first-time buyer and mover purchaser segments recorded increased activity year-on-year, something that has not happened for six years.
First-time buyers and mover purchasers together account for 80 per cent of all new mortgages issued at present, according to the study.
“These latest figures show that contraction in activity continues to slow significantly and the second quarter of this year has actually recorded modest growth in both first-time buyer and mover-purchaser activity – something not seen since the first quarter of 2006,” said Pat Farrell, chief executive of the Irish Banking Federation.
“Taken together with recent comments from property economists signalling stabilisation in house prices in key sectors of the Dublin market, we will be looking to the next quarter’s data for confirmation of the trend indicated in this quarter.
“The period to the year end is key as mortgages taken out after December 31st next will not qualify for mortgage interest relief,” he added.
The Professional Insurance Brokers Association said the value of mortgages issued was “entirely unsatisfactory” and went “nowhere near” meeting demand.
“This demand, which is largely unmet because of a severe lending squeeze by the banks, is being driven primarily by people believing that property prices are close to the bottom of the market and the fact that it is as cheap to buy as rent,” said Piba chief operations officer Rachel Doyle.
Goodbody chief economist Dermot O’Leary said while the IBF/PwC data showed an increase in transactions, there was still a long way to go to return to a normal mortgage market.
“It is clear from the data that we are seeing the signs of improvement, albeit from an unsustainably low level,” he said. “Whether this trend continues remains to be seen but we are somewhat concerned by the further tightening in lending standards for mortgages in the recent bank lending surveys from the Central Bank. Furthermore, based on UK comparisons, Ireland still has a long way to go to reach an ‘appropriate’ level of mortgage lending.”