Mortgage lending jumped 16% to €5.1bn in year to February

New mortgages worth €5.1 billion were signed in the 12 months to the end of February, marking a 16 per cent increase on the same period a year earlier.

The latest figures from the Central Bank show €369 million of those new agreements were signed in February this year. That represents an increase of 18 per cent on the same month last year when €312 million worth of new mortgage agreements were made.

In November last year the Central Bank announced a relaxation of mortgage-lending rules for first-time buyers which was followed by a 42 per cent increase in the number of people who obtained mortgage approval in February, according to the Banking and Payments Federation. The new rules removed the €220,000 cap on mortgage lending for first-time buyers with a deposit of 10 per cent.

The weighted average interest rate on new mortgage agreements in the Republic stood at 3.38 per cent, higher than the equivalent euro-area rate of 1.80 per cent.

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Variable-rate mortgages

Standard variable-rate mortgages saw the most pronounced fall in principal dwelling home (PDH) mortgage rates, dropping by 35 basis points to 3.40 per cent. While the share of fixed-rate PDH mortgages in new drawdowns fell over 2016, they still accounted for about 40 per cent of all new PDH mortgages.

Variable buy-to-let (BTL) mortgage rates for new drawdowns fell by 0.2 per cent over the 12 months to 2017 to 4.71 per cent. The Central Bank found that the majority of BTL lending is at variable rates, accounting for 90 per cent of new drawdowns in the final quarter of 2016.

Renegotiated mortgages amounted to €419 million in February, with variable-rate products accounting for the majority of renegotiations. In February 2017, the weighted average interest rate for renegotiated mortgages was 3.01 per cent, down from 3.2 per cent in February 2016.