User Menu

Mortgage approvals fall almost 10% in March

Banking & Payments Federation Ireland expects Covid-19 to hit approvals further

Brian Hayes: “There is no doubt that the period ahead is going to be challenging for the mortgage market and the housing market as a whole.”

The number of mortgages approved by Irish banks in March declined by almost 10 per cent on the same month last year, new figures show. This is the first signal of the impact of Covid-19 on lending.

The Banking & Payments Federation Ireland (BPFI) published data on mortgage approvals for the month of March on Tuesday, as well as mortgage drawdowns for the first quarter of the year.

The figures show the number of mortgages approved in March rose by 6.2 per cent month-on-month but fell by 9.9 per cent when compared with the same period last year.

A total of 3,733 mortgages were approved in March 2020, including 1,946 for first-time buyers, which represented 52.1 per cent of total volume. Mover purchasers accounted for 970 or 26 per cent.

Mortgages approved in March were valued at €879 million, of which first-time buyers accounted for €463 million (52.7 per cent), and €260 million by mover purchasers (29.5 per cent).

Home loans

The value of mortgage approvals rose by 6.5 per cent month-on-month but fell by 4.5 per cent year-on-year.

In terms of mortgage drawdowns for the first quarter, 8,728 new home loans to the value of just under €2 billion were drawn down by borrowers. This represented an increase 1.8 per cent in volume and 6 per cent in value on the corresponding quarter of 2019.

A comparison with the previous quarter shows a fall of 28.8 per cent in volume and 27.9 per cent in value but the BPFI said that the first quarter is typically the weakest period in any year and fourth quarters tend to be the strongest.

First-time buyers remained the single largest segment by volume (50.4 per cent) and by value (50.8 per cent).

BPFI chief executive Brian Hayes said the figures were broadly in line with what he would have expected with the approvals figures in particular reflecting a tapering-off in the mortgage market over the past 12 months due to the growing affordability challenge for buyers.

Incomes and employment

“There is no doubt that the period ahead is going to be challenging for the mortgage market and the housing market as a whole, given the changing conditions in the economy and its direct impact on incomes and employment,” he said.

“We expect to see the first effects of Covid-19 on the mortgage market coming through in April’s approvals figures, which will be published at the end of May.

“The change in individuals’ financial and employment circumstances will have an impact on mortgage approvals, with banks taking a pragmatic and responsible assessment of all applications from both a borrower and lender perspective.

“Taking out a mortgage is a major undertaking for borrowers, and no lender wants to see a borrower under distress or difficulty, especially in these highly uncertain times.

“As we navigate our way through these unprecedented times, it will be necessary for both lenders and borrowers to take a realistic and pragmatic approach until such time as we have more clarity on the wider impact of the pandemic as a whole.”

Is it time to make
your next career move?