Mortgage approvals tumbled in first full month of lockdown – BPFI

Warning of challenging period ahead for housing market due to economic uncertainty

The number of mortgages approved fell by 41.1 per cent compared to March and was down by 46.5 per cent compared with April 2019. Photograph: iStock

The number of mortgages approved fell by 41.1 per cent compared to March and was down by 46.5 per cent compared with April 2019. Photograph: iStock

 

New mortgage approvals fell by more than 40 per cent in the first full month of the Government-imposed lockdown, with first-time buyers accounting for almost half of approvals, data from the Banking and Payments Federation Ireland (BPFI) show.

A total of 2,200 mortgages were approved in the month, 47 per cent of which were for first-time buyers. The number of mortgages approved fell by 41.1 per cent compared to March and was down by 46.5 per cent compared with April 2019.

The total value of mortgages approved in the month was €525 million, of which first-time buyers accounted for €256 million, or 48.8 per cent. Movers, who accounted for 24 per cent of all mortgages, were responsible for €135 million worth of approvals.

“In the current conditions it is likely that we will see a similar fall in mortgage drawdowns for this quarter as they follow the downward trend shown in today’s figures,” said BPFI chief executive Brian Hayes.

“Looking ahead, there is no doubt that the period ahead will remain challenging for the mortgage market and the housing market as a whole as the current economic uncertainty continues. And during this period it will be necessary for both lenders and borrowers to take a realistic and pragmatic approach given the change in individuals’ financial and employment circumstances,” he added.

The smallest fall in approvals was seen in the category for those who are re-mortgaging or switching their mortgage. Year-on-year, the total figure fell 16.7 per cent to 450. Elsewhere, buy-to-let approvals saw the biggest percentage drop, with a 62.7 per cent fall in approvals year-on-year, amounting to a total of 44 approvals.

The figures also break out the volume of approvals specifically for property purchases and show a drop in that category of 51.4 per cent to 1,606. First-time buyer approvals for property purchases dropped by 51 per cent to 1,034.

In the 12 months to the end of April, there were 47,084 mortgage approvals with a value of €10.78 billion. Annualised mortgage activity to the end of April was down by 3.9 per cent in volume terms compared with the 12 months to the end of March and 4.28 per cent compared with the year prior.