Number of new mortgages at 1970s levels
The number of new mortgages being issued by Irish lenders is at a level similar to that of the 1970s, according to new figures published by the Irish Banking Federation and consultants PwC.
The number of new home loans being originated by Irish banks is likely to come in just ahead of the 11,000 issued in 1971, but below the 15,000 issued in 1972, according to the figures.
A total of 3,983 new mortgages to the value of €663 million were issued during the third quarter of 2012, bringing to almost 10,000 the total number of new mortgages issued during 2012 to date. The number of mortgages issued over the last three months was 23.5 per cent above the second quarter of 2012 and 10 per cent higher than the third quarter of 2011, with the value of drawdowns increasing 6 per cent to €663 million.
The data supports recent comments from the Bank of Ireland chief executive, who said there had been a “noted pick-up” in mortgage demand in recent months, according to financial services firm Glas Securities.
AIB said yesterday it was approving seven out of 10 mortgage applications.
It added that its share of drawdowns in the third quarter was 43 per cent, up from 25 per cent a year earlier.
The bank expects to “comfortably” exceed its target of €1 billion in sanctions for 2012.
With 52 per cent of new mortgages in the third quarter going to first-time buyers, it is likely that the abolition of mortgage interest relief for this segment due at the end of the year is boosting mortgage demand and lending to some degree, Glas noted.
“Whereas data from previous quarters showed that contraction in activity continued to slow, the Q3 data is showing actual growth in activity – something we haven’t seen in some time,” said Irish Banking Federation director of public affairs Felix O’Regan.
He said this was a welcome trend, particularly in light of reports from market analysts indicating a stabilisation in average house prices in Dublin, for example.
However, while mortgage lending increased in the past quarter, year-to-date lending is still 5 per cent lower than the first quarter of 2011, and represents just 6 per cent of peak quarterly mortgage lending, which was in the third quarter of 2006.
At the peak of the property market in 2006 more than 54,000 mortgages with a total value just short of €11 billion were issued in the third quarter alone.