THERE are fears that mortgage lending will drop suddenly in the new year because of the planned withdrawal of mortgage tax relief and the introduction of the property tax.
The concern that the number of mortgages issued "will fall off a cliff" comes after the latest figures show the first rise in home-loan lending in six years.
Figures released last week by the Irish Banking Federation showed that close to 4,000 new home loans were granted by banks in July, August and September.
The figure represents a rise of more than 10pc in mortgages issued when compared with the same three-month period last year, and a rise of 23pc on the number issued in the second quarter of this year. It is the first annual rise in the number of mortgages issued since 2006.
A majority of the loans were issued to first-time buyers, who are in a scramble to close property deals before the end of the year to benefit from generous tax reliefs.
The rush of new buyers is expected to extend to the final three months of the year, but then slow down in January, February and March.
The first three months of the year are traditionally a quiet period for mortgage lending anyway, Michael Dowling, of Dowling Financial Services in Dublin, said.
"Lending will calm down in the first quarter but I don't think it will fall off a cliff."
Mr Dowling said many potential buyers were lining up to buy next year. And the existence of mortgage tax relief was adding between €10,000 and €15,000 to the price of houses.
"Sellers know they can command an extra €10,000 to €15,000 extra on the sale price because buyers want to get the relief," he said.
Sources at AIB said they were seeing a pipeline of mortgage applications coming through for next year.
Broker Karl Deeter joined the calls of a number of groups for mortgage tax relief to be extended in a limited form into next year to ensure the signs of a pick-up in lending do not peter out.
"The property market is in intensive care, so it will not help to take away mortgage tax relief," he said.
Those with existing mortgages and banks will be hoping that recent signs that property prices are stabilising can be built on.
Property prices have risen or remained flat in five of the nine months of this year, according to the Central Statistics Office.
And recent figures on the average rent from Daft.ie show that it is now cheaper to buy than rent.
A stabilisation of the property market would allow banks and households to recover and generate the growth needed to pay off their debts.