Fall in mortgage approvals and drawdowns for first-time buyers

New figures show Central Bank restrictions continue to impact on lending

First-time buyer mortgage drawdowns were particularly hard hit, showing the first decline seen in two years during the fourth quarter

Tougher Central Bank lending restrictions continued to impact on the property market during the last three months of 2015 with the number of mortgages approved and drawndown slowing.

New figures published by the Banking and Payments Federation Ireland show 8,103 mortgage were drawn down in the fourth quarter, up 6.9 per cent year-on-year. The value of the mortgages drawndown rose by 8.2 per cent to €1.45 billion.

This represents a considerable slowdown versus the 44 per cent rise in volumes and 49 per cent increase in values seen during the first half of the year.

Goodbody Stockbrokers said the weakening trend highlighed the impact that the macro prudential rules, introduced by the Central Bank last February, were having on the mortgage market.


Analyst Julie Tennant also noted that a comparison with the same quarter a year earlier was challenging as the market was particularly strong in the final three months of 2014, as activity surged ahead of the expiration of a special CGT exemption.

First-time buyer mortgage drawdowns were particularly hard hit in the fourth quarter of 2015, recording the first decline seen in two years.

First-time buyer mortgages, which accounted for 47.1 per cent of all mortages drawn down during the fourth quarter, were down 5.4 per cent to 3,819, the figures show. In contast, re-mortgages or swiching volumes more than trebled year-on-year during the final three months of 2015.

The value of mortgages drawndown by first-time buyers also fell during the quarter, down 3 per cent year-on-year to €655 million.

On an annual basis, mortage drawdowns rose by 23.5 per cent last year to 27,324 with the value of drawdowns up 26.2 per cent to almost €4.9 billion.

Related figures published by the federation show a total of 2,375 mortgages were approved per month in the fourth quarter, of which 51 per cent were for first-time buyers.

The number of approvals was down 14.6 per cent year-on-year and 6.7 per cent month-on-month.

The value of mortgages approved per month, on average, in the three months ending to the end of December was €448 million, down 12.3 per cent year-on-year and 5.1 per cent month-on-month.

Overall, 29,925 mortgages, valued at €5.6 billion, were approved last year, up 13 per cent in volume terms and by 17.6 per cent in value.

The Irish Brokers Association said the latest figures show a slow recovery in mortgage market activity is underway but said the Central Bank needed to be revisited.

“The mortgage market is fluid and so too should the rules pertaining to it be,” said the association’s chief executive Ciaran Phelan.

Charlie Taylor

Charlie Taylor

Charlie Taylor is a former Irish Times business journalist