Mortgage approvals rose almost 15% in August

The number of mortgages approved in August rose by almost 15 per cent compared with the same month last year, new figures from the Banking and Payments Federation Ireland show.

A total of 3,964 mortgages were approved, with some 2,029 of them first-time buyers. Mover purchasers accounted for 1,202 (30.3 per cent).

The number of mortgages approved rose by 14.7 per cent year-on-year and declined by 0.2 per cent month-on-month.

The value of mortgages approved in August equated to €842 million, of which€428 million (50.8 per cent) was accounted for by first-time buyers and €293 million (34.8 per cent) by mover purchasers.

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The value of mortgage approvals rose by 2 per cent year-on-year and rose by 0.9 per cent month-on-month.

Remortgage/switching approval volumes grew 22.6 per cent on a year-on-year basis with activity accounting for 9.5 per cent of the value and 8.9 per cent of the volume of mortgages.

Analyst Davy said the approvals data showed 25 per cent annual growth. “This is below the 42 per cent growth in the first eight months of 2017 but close to our forecast for 30 per cent growth in the mortgage market to €7.5 billion in 2017,” it said in a note.

Leverage

“The average mortgage approval to first-time buyers was €211,000 in August, up 11 per cent on the year, suggesting leverage in the mortgage market is rising but still well below the 3.5x loan-to-income threshold set by the Central Bank.”

Investec said the figures suggest “continuing strong demand” for new mortgage draw-downs.

“Though the trend for new approvals continues to glide lower, this is in line with our expectations given the very strong set of approvals seen at the start of the year,” it said.

“By number of approved borrowers, there was 29,371 in approved applications in the eight months to August, a 32 per cent increase on the 22,226 approvals seen in the same period last year.

“The average value of new mortgage approvals dipped slightly in August to €212,000, from €215,000 in July, but is still 8.6 per cent higher than in August 2016.”

It continues that first time buyers “remain the dominant factor” in new approvals, at 51 per cent by value and 52 per cent by volume of approvals.

“This has risen from 47 per cent (value) and 49 per cent (volume) in August 2016, showing their importance for mortgage draw-downs is in fact increasing,” it said.

“This will be a continuing dynamic in the coming years given the pent up demand from first time buyers and the expected increases in new home supply to meet this.”