Irish mortgage approvals drop almost 5% in November

Irish mortgage approvals fell in number in November, though the value of loans sanctioned rose marginally to almost €1.3 billion, according to Banking & Payments Federation Ireland (BPFI).

The number of mortgages sanctioned during the month fell 4.6 per cent on the year to 4,959 loans. However, the value of approved loans rose by 0.2 per cent to €1.28 billion, the highest November reading across the State’s lenders since at least 2011, when the BPFI began its series of recording monthly approvals.

"On an annualised basis, more than 53,000 mortgages worth some €13.4 billion were approved in the 12 months ending November 2021," said BPFI chief executive Brian Hayes. "Looking ahead, the fourth quarter of the year is generally the strongest quarter for mortgage drawdowns and, with a strong pipeline of mortgage approvals, the outlook is very positive for a strong end to the year."

Goodbody Stockbrokers estimates that borrowers drew down about €10.4 billion in mortgage debt last year, the highest since the financial crisis, and that the figure will rise to €11.6 billion in 2022.

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However, the gap between approvals and drawdowns reflects the dearth of housing supply in the market.

Home completions

While the consensus view among economists is that home completions will amount to about 22,000 units this year, this falls well short demand. A Central Bank report published before the onset of the Covid pandemic suggested that about 34,000 homes would have to be built each year over the next decade just to meet demand.

The shortfall in supply is also fuelling home prices, which were rising at an annual rate of 13.5 per cent as of October, according to the latest figures from the Central Statistics Office.

Still, the Central Bank has said that house prices could have been up to 25 per cent more expensive had it not introduced measures in 2015 to limit mortgage lending. While the regulator is currently carrying out a major review of the restrictions, it signalled last month that it was reluctant to make significant changes.

The rules currently restrict most buyers from borrowing no more than 3½ times their annual salary or, in the case of second-time or subsequent buyers, from taking on a loan of more than 80 per cent of the value of the property. First-time buyers can borrow 90 per cent of the property value.

November saw the number of mover-purchase loan approvals decline almost 15 per cent to 1,172, while those for first-time buyers dipped nearly 6 per cent to 2,662, according to the BPFI data.

However, loan sanctions for households seeking to remortgage or switch to another provider rose 20 per cent to 749.