Mortgage lending soars as recovery continues

Mortgage lending rose by 73 per cent in the first quarter of 2015 to € 983m, as first-time buyers continued to dominate the market.

However, both the value and volume of mortgage lending was down on the last quarter of 2014, and the impact of tighter lending requirements from the Central Bank, which came into force on February 11th, has yet to be fully observed.

According to data published on Tuesday by the Banking and Payments Federation Ireland, some 5,618 new mortgages worth €983m were drawn-down in the first quarter, up by 64 per cent on the same period in 2014, but down by 26 per cent on Q4 2014, traditionally the strongest period for mortgage lending. This compares with Q1 2007 when 7,919 loans worth some €7.8 bn were drawndown.

First time buyers accounted for more than half (53.6%) of these loans, followed by those trading up (31.9%). Just 320 buy-to-let mortgages were drawn down during the period, accounting for 5.7 per cent of the total. While down on Q4 (395), the figure is up 74 per cent on Q1 2014, suggesting that investors are looking to take advantage of strong rental growth.

The average loan size rose to € 175,016 in Q1 2015, up 5.5 per cent on Q1 2014.

Central Bank rules

Davy economist Conall MacCoille expects total new mortgage lending to reach €4.5bn in 2015, up from €3.7bn in 2014 and €2.4bn in 2013. However, growth rates have slowed, and Mr MacCoille said that the new lending rules from the Central Bank “will constrain credit availability as the year progresses”.

As of yet, the figures reveal little about the impact the new rules might have.

Juliet Tennent, economist with Goodbody Stockbrokers, says that while it is difficult to quantify the incidence of those who received mortgage approval under the "old" regime accelerating home purchase in the aforementioned figures, the Q1 numbers are encouraging as is the strong approvals figure for March,noting that the recovery has "momentum".