Drop in number of first-time buyers getting mortgages approved in July

Some 63 of these mortgages, worth an average €218,702, approved every day in July

Fewer-first time buyers got mortgages approved in July compared with the same month of last year, as new figures point to tentative signs of a slow down in the numbers of new buyers either seeking, or obtaining, loan approval for a house purchase.

However, the value of a first-time buyer’s mortgage rose by 3 per cent over the year, on the back of rising property prices.

According to figures from the Banking & Payments Federation Ireland (BPFI), mortgage approvals continued to rise in July, with some 4,222 home loans approved in total, up by 6.6 per cent on the year, but down by 1.2 per cent on June, possibly due to seasonal factors. It was switchers, rather than new buyers driving the growth.

Almost half of the mortgages approved were for first-time buyers, at 1,957 or 46.4 per cent, with trader uppers/downers accounting for 1,249 or 29.6 per cent. This means that there were 63 first-time buyer mortgages, worth an average €218,702, approved every day in July. However the figures do point to a slight slowdown in the number of FTB mortgages being approved. FTB volumes fell for example from 22,224 in the 12 months ending February 2018, to 21,878 in the 12 months ending in July 2018, and were down by 3.9 per cent from June to July. However, they remained the single largest segment by volume (46.4%) and by value (46%) in July.


Increasing competition

On the back of rising property prices, the value of mortgages approved rose by 8.6 per cent in the year to July, up to €931 million, but again was down on the month, by 3.2 per cent.

BPFI's chief economist, Ali Ugur, pointed to an increase in competition for residential housing as a factor in price rises, noting that home buyers now face increasing competition from non-households, such as local authorities for new and second-hand homes, in their search for properties.

“In the 12 months ending June 2018, some 22 per cent of market-based sales of new residential property were made to non-households: the figures show that local authorities alone acquired almost 2,900 houses in the past two years and built about 1,300 properties over the same period. With non-households also buying second-hand properties, private purchasers face significant competition for the limited supply of housing coming on to the market.”

Mr Ugur also said that construction prices are now approaching Celtic Tiger highs. He expects the index of construction prices to be around 7.4 per cent for the year, which will bring construction prices back to the level they were at in the first half of 2006 and just five index points below what they were when prices peaked in the first half of 2007.

“The major reasons cited by SCSI members for the continuing increase in tender prices are increasing workload coupled with skills shortages as well as increasing cost of labour and materials,” he said.


With mortgage rates continuing to fall – yesterday KBC Bank announced a one year fixed rate of 2.5 per cent – there is increasing value to be found by switching a mortgage.

No surprise then, that the figures show that re-mortgage/switching approvals rose on a year-on-year basis - by 71.5 per cent in volume and by 73.6 per cent in value terms. However, while the growth figures may be strong, it comes off a low base; just 523 mortgages were switched or re-mortgaged during the month, or just 17 a day.

"Irish mortgage holders still remain reluctant to switch, which is crazy given the potential savings involved," said Daragh Cassidy, head of communications at price comparison and switching site bonkers.ie, adding: "There's now a huge variation in rates and incentives across all the different lenders so I would encourage anyone who's been with their mortgage provider for a few years to consider their options and look into switching to a better deal."

Fiona Reddan

Fiona Reddan

Fiona Reddan is a writer specialising in personal finance and is the Home & Design Editor of The Irish Times