Saturday 25 October 2014

Buzz in housing market sees rise in mortgage demand, more loans

Published 31/01/2013 | 05:00

More people applied for mortgages in the last quarter of 2012

DEMAND for mortgages increased during the last three months of 2012 and loans were easier to get, the latest survey from the Central Bank shows.

The results are in line with other signs of increased activity in the housing market.

Banks reported that they had also eased standards for consumer credit and other loans to households, but demand for such loans was unchanged in the final quarter.

The survey showed there was no change in the criteria or demand for business loans. A fall in demand in the second quarter was followed by an increase in the following three months, which was maintained in the final quarter.

It also showed that the biggest increase in applications was to finance stock and for working capital. Demand has remained steady since, and the banks expect this to continue in the current three months.

Separate analysis by the Central Bank's own economists, published this week, showed Irish small and medium-sized enterprises had more loan applications rejected than SMEs in Italy and Spain, though the figures were on a par with Portugal.

However, Irish firms seem more pessimistic about getting a loan than anywhere else, except Greece. Fifteen per cent said they did not bother applying in the first half of last year, compared with 8pc in Spain and Portugal.

The bank said the increase in mortgage demand coincided with more favourable housing market prospects and an increase in consumer confidence.

The Professional Brokers Association (PBA) said the easing of credit standards on loans, while welcome, was still only "scratching the surface".

PBA chief operations officer Rachel Doyle said: "Demand for mortgages is consistent and strong.

"More than one in every two brokers is experiencing an increase, and many are still experiencing abnormally high rejection rates with only a mild improvement in the situation between 2011 and 2012."

Banks told the survey that the improvement in government bond markets had helped their own access to loans during the fourth quarter, but their capital strength declined.

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