Mortgages worth €518m issued during Q2

First-time buyers and mover purchasers account for 85% of new mortgages

Mortgages to the value of ¤518 million were issued during the second quarter of this year. Photo: Frank Miller/The Irish Times

Mortgages to the value of ¤518 million were issued during the second quarter of this year. Photo: Frank Miller/The Irish Times

Fri, Aug 16, 2013, 15:11

Mortgages to the value of €518 million were issued during the second quarter of this year, new figures show.

This was up 56.1 per cent on the previous quarter during which €331 million worth of mortgages were issued.

The Irish Banking Federation/PwC Mortgage market profile shows that 3,229 new mortgages were issued in Q2, compared to 2,068 in the first three months of the year.

The IBF said the figures reflect a very modest 0.1 per cent growth in Q2 compared to the same quarter in 2012, which is the first time year-on-year growth of any kind has been recorded in the second quarter since 2006. However, while the number of mortgages issued may have increased by 0.1 per cent, the value of them declined by €6 million according to the fugures.

The average loan size now stands at just over €160,000, up marginally (0.2 per cent) on the first quarter, but down 1.4 per cent year-on-year.

The IBF said the home formation segments of the market - first-time buyers and mover purchasers - continued to dominate the market accounting for more than 85 per cent of new mortgages issued. First-time buyers and mover purchasers accounted for just 35 per cent of mortgages five years ago.

The IBF welcomed the quarterly uplift recorded in both volume and value of new mortgages, saying lenders continue to report a “healthy pipeline” of borrower interest.

“The volumes of property sales and mortgage drawdowns while improving are probably only a third of what would constitute a healthy market,” according to Graham Murray, head of residential at Savills Ireland.

He said this is driven by a number of factor including a dearth of properties on the market and a cautious approach by mortgage lenders, which are restricting people from trading up causing a knock-on shortage of properties for those trying to buy their first home.

Frank Kenny, director of financial consultancy firm Opes Wealth Trust, said the volumes of new mortgages were still less than 10 per cent of what they were 7 years ago.

“While the apparent growth of 56 per cent on Q1 sounds great, it should be remembered that Q1 2013 was poorer than usual with many applications pulled forward into Q4 2012 to capture the tax incentive that expired at the end of 2012.”