Mortgage approvals surged in October to record level

First-time buyers drive approvals up nearly 23% year on year

The BPFI said this was the busiest month for mortgage approvals since the data series began in 2011. Photograph:   Dominic Lipinski/PA Wire

The BPFI said this was the busiest month for mortgage approvals since the data series began in 2011. Photograph: Dominic Lipinski/PA Wire

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There was a surge in mortgage approvals in October driven by first-time buyers, according to Banking and Payments Federation Ireland (BPFI).

The industry group’s latest monthly monitor of activity suggested a total of 5,207 mortgages worth €1.25 billion were approved in October, up nearly 13 per cent on the previous month. The value of mortgage approvals rose by nearly 23 per cent year on year.

The BPFI said this was the busiest month for mortgage approvals since the data series began in 2011.

“We have seen very strong growth in mortgage approvals during October, which in fact is the busiest month for approvals since BPFI began collecting this data in 2011,” BPFI chief executive Brian Hayes said.

“This has largely been driven by first-time buyers who made up almost 60 per cent of both the total volume and value of approvals as uncertainty around the economy due to Covid-19 has declined,” he said.

Uplift

“Even though mortgage approvals are down by 19 per cent in volume terms and 14 per cent in value terms in the first ten months of 2020 compared with the same period in 2019, continued uplift in approval activity in October represents a strong pipeline for drawdown activity as we move into 2021 which can help feed into an overall recovery in the economy in the year ahead,” Mr Hayes added.

Severe restrictions to curb the spread of coronavirus had dampened activity in the State’s housing market earlier this year but there has been a strong bounce back in activity since late Summer.

The BPFI’s figures show remortgage/switching mortgage approval volumes fell by 3.7 per cent year-on-year to 521, while the number of top-up approvals fell by 5 per cent year-on-year to 267.

Residential investment letting approvals were down 23 per cent versus to just 111.

The Central Bank of Ireland last week ruled out a temporary loosening of mortgage lending rules during the coronavirus crisis while warning that the imbalance between housing demand and supply is likely to persist “for an extended period”.

Governor Gabriel Makhlouf said borrowing limits continued to meet their objectives of strengthening bank and borrower resilience and would remain unchanged for 2021.