Business

First-time buyer mortgage activity rises to highest level since 2007

The number of drawdowns by first time buyers reached a new post-crash peak of almost 26,000, valued at more than €7.2 billion in 2023

Despite robust first-time buyer activity, total mortgage drawdowns and approvals declined in 2023 on the back of higher borrowing costs . Photograph: Niall Carson/PA Wire

Eoin Burke-Kennedy
Fri Jan 26 2024 - 05:05

Mortgage drawdowns for first-time buyers (FTBs) rose to its highest level since 2007 last year despite an overall slowdown in mortgage activity, a new report by the Banking and Payments Federation Ireland (BPFI) has indicated.

The number of FTB drawdowns reached a new post-crash peak of 25,591, valued at more than €7.2 billion in 2023, the banking group’s report said.

The Government’s Help to Buy scheme combined with the new First Home initiative, which offer first-time purchasers tax rebates and other financial supports to get on the property ladder, have helped fuel greater activity in the new homes market.

Critics, however, have highlighted the inflationary consequences of these schemes.

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The BPFI’s report showed the average FTB mortgage rose to €282,084, up from €264,621 a year earlier. “This is the highest level since the data series began in 2003 and the tenth consecutive year in which it increased,” BPFI chief executive Brian Hayes said.

FTB mortgage approvals values rose by 15.9 per cent in 2023, to more than €8.8 billion. This represented a rise of 8.9 per cent and 15.9 per cent in volume and value terms compared with 2022.

“We have seen housing output increasing significantly in the past two years and the potential output for 2024 looks encouraging, evident from the commencement activity which reached almost 33,000 units in 2023

—  Brian Hayes, BPFI chief executive

Despite robust FTB activity, total mortgage drawdowns and approvals declined in 2023 on the back of higher borrowing costs driven by a sequence of 10 European Central Bank interest rate increases.

Annual mortgage drawdown volumes fell by 17.2 per cent to 43,587 while approval volumes fell by 14.4 per cent to 49,898.

This drop was mainly due to a 63.5 per cent decline in re-mortgage/switching activity in 2023 having more than doubled (up 107.7 per cent) in 2022, the BPFI said.

Mr Hayes said: “Looking ahead for 2024, we expect housing and mortgage demand to remain strong, notwithstanding the expected slowdown in Irish economic growth.

“We have seen housing output increasing significantly in the past two years and the potential output for 2024 looks encouraging, evident from the commencement activity which reached almost 33,000 units in 2023. Increasing supply should also help average property price inflation ease during the year.”

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times

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