Mortgage approvals down as buyers face competition

Private firms, charities and State institutions contribute to more competitive environment

Over the last three months, remortgaging/switching activity rose 25% compared to the same period a year earlier.

Over the last three months, remortgaging/switching activity rose 25% compared to the same period a year earlier.


It was a slow start to the year in terms of mortgage approvals with house buyers also facing increased competition for homes from private companies, charities and State institutions.

New figures from Banking and Payments Federation Ireland (BPFI) show mortgage approvals were down 3.4 per cent annually in January with the value of approvals down 2 per cent to €672 million.

The only part of the market to see growth during the month was remortgaging/switching activity, which jumped 12.4 per cent in volume terms over the year and by 5.6 per cent in value terms to €91 million.

Over the last three months, remortgaging/switching activity rose 25 per cent compared to the same period a year earlier.

“New rules that compel banks to make information available to mortgage holders on other potential mortgage options will also continue to propel this category,” said Dermot O’Leary, chief economist at Goodbody.

A total of 3,037 mortgages were approved in January, of which 1,479 or 48.7 per cent, were for first-time buyers. Mortgage approvals were valued at a combined €672 million – of which first-time buyers accounted for €327 million.

Cash sales accounted for 27.8 per cent of sales on an annualised basis in the fourth quarter, down from 32.2 per cent a year earlier.

The average approval for house purchase, according to BPFI was €231,700, up 2.6 per cent on the year.

Mortgage approval volumes for property purchases fell by 5.7 per cent year on year to 2,438, the figures show.

In a note to investors, Davy said Brexit uncertainties could be weighing on activity, although it added it is too early to tell with any certainty as yet.

There were 45,548 mortgage approvals in the 12 months ending January 2019, valued at a combined €10.1 billion. Annualised mortgage approval activity reduced in volume terms by 0.24 per cent and by 0.17 per cent in value versus a year earlier.

Supply improving

BPFI chief economist Dr Ali Ugur said while housing supply is improving, buyers are facing increasing competition from the non-household sector, particularly for newly built homes.

“The role of non-household buyers, which include private companies, charitable organisations, and state institutions, in housing market transactions has increased particularly since 2010 where they accounted for around 4 per cent of all market-based activity, whereas this ratio has increased to 17 per cent in 2018,” he said.

“In terms of transactions in the newly built housing units, non-households accounted for around 22 per cent of all transactions in this category in 2018 compared to 7 per cent in 2010,” added Dr Ugur.

Mr O’Leary said despite the lacklustre start to the year he expected higher levels of new housing supply to be a driver of growth in the mortgage market in 2019.

Goodbody forecasts mortgage drawdowns will grow 15 per cent year on year to €10 billion in 2019.