Mortgage lending at lowest level since records began
MORTGAGE lending plunged last year to the lowest level since records began in 2005, as borrowing by investors and those seeking to trade up plummeted.
Just €8.08bn of mortgage loans were issued in 2009, a 65pc drop on the previous year, the Irish Banking Federation said yesterday. The number of loans made fell 58.5pc to 45,818.
“The data illustrate how difficult 2009 was for the mortgage market,” Irish Banking Federation boss Pat Farrell said.
“The general economic situation, consumer confidence, the unsold housing stock and house-price movements will be among the factors to influence market activity in 2010.”
Despite the plunge, first-time buyers and people moving house still only accounted for two-thirds of mortgage lending in the final quarter of 2009. Investors and those seeking socalled top-ups or remortgages accounted for the remainder.
The market remains so moribund that there are more people borrowing money to “top up” their mortgages than there are people borrowing to move house.
Just 2,116 people took out a mortgage to move house in the final quarter of last year, the figures show. The amount borrowed by home buyers has fallen as property prices continue their downward spiral.
First-time buyers borrowed an average of €206,865 in the final quarter of 2009, compared with €243,232 in the last quarter of 2007, when the property market was beginning to crumble.
Those trading houses borrowed an average of €242,793, compared to an average of €271,751 two years earlier. House prices have fallen in every month since March 2007 and are now around 40pc below their peak in the early part of that year, according to the Irish Homebuilders Association.
Rating agency Moody's said last month that the percentage of Irish home mortgages at least 90 days in arrears had hit 3.3pc – the highest since it began monitoring the area in 2004.
The EBS building society claimed yesterday to have increased its share of the retail mortgage market by seven percentage points to 21.3pc last year.
The lender also said it was lending 43.8pc of all loans made to first-time buyers in the retail market last year.
The EBS cited market data given to lenders by the Irish Banking Federation but not released to the public. Other lenders have not disclosed their share of the market.
“The level of applications, specifically for first-time buyers, remains strong. This suggests that some potential buyers have decided that now may be the time to get into the market,” the EBS said.
“Affordability levels continue to improve for first-time buyers. The quarterly index shows that the average proportion of net income required to fund a mortgage has fallen by more than 50pc in the past three years,” said membership business director, Dara Deering.
“These kinds of figures, in addition to the well-publicised fall in house prices, are prompting people to consider their options and we would expect to see increased levels of activity in 2010.”