Number of mortgage drawdowns jump 30 per cent to 6250

The number of mortgages drawn down in the second quarter of 2015 jumped 30.1 per cent when compared to the same period last year.

According to new figures from the Banking and Payments Federation a total of 6,250 mortgage loans, valued at €1.08 billion, were drawn down in the second quarter of this year. In value terms, this is a 32.3 per cent increase compared to the second quarter of 2014, when loans valued at €820 million were drawn down.

However, Goodbody stockbrokers noted the percentage figures are significantly lower than the first quarter. The number of mortgage drawdowns soared 64 per cent to 5,618 between the first quarter of 2014 and first quarter of 2015. The value of mortgages drawn down meanwhile jumped 73 per cent to €983 million during the same period.

Goodbody said the statistics reflect the effects of the tighter Central Bank rules on mortgage lending, which came into force in February.

“After booming in the first quarter, mortgage lending growth slowed significantly in Q2,” Goodbody economist Dermot O’Leary said.

He said the noise currently being seen in the Irish housing statistics is likely due to the fact that many mortgage holders accelerated their decisions ahead of the imposition of new Central Bank rules.

“It will take some time to truly ascertain whether this effect is purely transitory or that the new rules are restricting demand. We believe it more a case of the former,” he added.

Goodbody Stockbrokers also noted that while remortgaging is now at the highest level in four years, it still only represents approximately 4 per cent of total lending volumes.

The value of re-mortgage loans increased to its highest level since the second quarter of 2011, accounting for €55 million.

The mortgage monitor said the value of first-time buyer mortgages grew by 39.6 per cent year-on-year to €552 million in the second quarter.

Owner-occupiers continue to dominate mortgage drawdowns with 90 per cent of all drawdowns, with first-time buyers accounting for 51 per cent and movers accounting for 39 per cent. The average loan size increased to €173,509 in the second quarter, up 1.6 per cent from €170,776 in the second quarter of 2014.

While first-time buyer and mover-purchaser volumes rose to their highest second-quarter levels since 2008 and 2009 respectively, the residential investment letting segment contracted 20.9 per cent compared with the first quarter of 2015.

Residential investment letting mortgages accounted for 253 out of the 6,250 drawn down in the second quarter.

Comparing the first and second quarters of 2015, there was a 11.2 per cent jump in volume terms rising from 5,618 to 6,250 mortgages and a 10.3 per cent jump in value terms, increasing from €983 million to €1.08 billion.

Davy Stockbrokers said AIB was the number-one lender in the first-half of 2015 with a 36 per cent market share in new lending, a continuation of a trend seen through 2014. Bank of Ireland retained the number-two position with a 35 per cent market share while Permanent TSB represented 9 per cent of market. Of the remaining 20 per cent, Ulster Bank and KBC accounted for the majority.

“While re-mortgaging continues to be subdued, the value of re-mortgage drawdowns has increased 160 per cent and now represents 5.1 per cent of all drawdowns which suggests switcher offers introduced in the first half are beginning to impact,” Davy said.

Meanwhile, ratings agency Moody’s has said the record-high consumer confidence in Ireland is unlikely to translate into a material improvement in loan arrears because high unemployment and stagnant salaries will continue to weigh on individuals’ ability to repay their debts.

Irish consumer confidence has bounced back in line with pre-crisis levels, at 99.7 in July 2015. However, Moody’s analysis reveals that there is no meaningful relationship between Irish consumer confidence and loan repayments. The agency said the record consumer confidence “belies loan arrears forecasts”.

“Overall, consumer loan performance is unlikely to improve significantly, despite the fact that consumer confidence in the peripheral euro area is back to a pre-crisis record high,” Moody’s said.

The ratings agency said that in Ireland, GDP growth and improving unemployment from 2009 to 2011 did not lead to declines in mortgage arrears of 90 days.