First-time buyers driving home sales

MORTGAGE ACTIVITY slumped in the third quarter of the year, but there are signs the rate of decline is moderating.

Figures released yesterday by the Irish Banking Federation (IBF) show 12,189 new mortgages were issued in the third quarter. This represents a 56.4 per cent year-on-year fall, but is just 3.9 per cent down on the previous quarter.

The statistics revealed some early signs of improvement. For example, the number of home loans advanced to first-time buyers grew for the second successive quarter. This category of buyers now accounts for almost 30 per cent of all new home loans.

“We have seen an increase of nearly 500 over the previous quarter in the number of mortgages issued to first-time buyers,” commented IBF chief executive Pat Farrell. First-time buyers now represent “the engine of a significantly reduced market”, he added.

“While the overall level of mortgage lending in quarter three shows little change from the previous quarter, the rate of decline in activity that has been so evident over recent quarters now appears to be moderating.”

Mr Farrell said the amount of credit available was greater than “consumers’ appetite to consume it”. This is borne out by the fact the level of mortgage approvals is 15-20 per cent higher than the number of home loans drawn down, he said.

However, responding to the IBF figures, Rachel Doyle of the Professional Insurance Brokers Association said the demand for mortgages is not being met because of “excessively tight” lending practices. Mortgage top-ups remained the largest segment of the market in volume terms, representing 31 per cent of all new home loans.

The number of mortgages drawn down by “mover-purchasers” slipped back quarter-on-quarter by almost 6 per cent.

The investment end of the market continued to shrink, representing just 5.7 per cent of all mortgages issued in the third quarter.

A separate survey released yesterday indicates potential housebuyers are waiting to see whether prices drop further. The MyHome.ie autumn survey shows that 52 per cent of respondents are monitoring the market, with nearly all intending to buy in the next 12 months. MyHome.ie is owned by The Irish Times Ltd.

Close to one-third of respondents said they believe house prices will remain static or even rise over the next year, while as many as 48 per cent expect prices to fall further.