A SURGE in the number of mortgages being approved for house purchases is a sign that the property market is on the mend, experts have insisted.
New figures show 2,010 mortgages with an average value of €172,000 were approved in November, according to the Irish Banking Federation.
This was up 38pc from the same month in 2011.
The federation said the new figures showed continued growth in the number of mortgages approved by mainstream lenders.
But they come just after ratings agency Fitch said property prices could fall by another 20pc this year.
Estate agency Savills agreed there may be further falls in rural areas, but there was evidence of strong demand for housing in cities and larger towns.
NCB Stockbrokers economist Philip O'Sullivan said the mortgage approval figures showed signs of a pick-up in lending, but from a low base.
The fact that Permanent TSB was committed to a five-fold increase in lending would help the mortgage market.
"We expect to see this momentum persist throughout 2013," said Mr O'Sullivan.
Trevor Grant of the Association of Expert Mortgage Advisers said many of those being approved for a mortgage in November would not have had enough time to beat the deadline for the withdrawal of mortgage tax relief on December 31.
This means there were other factors at play.
"The market is moving in the right direction, albeit far too slowly," said Mr Grant.
He called on banks to provide mortgages to people with negative equity so that those who owe more than their house is worth could take some of the existing debt on to a new mortgage when they move.
Yesterday's figures show that in the first 11 months of last year, mortgage approvals rose 12pc to 16,340. The value of all home loans approved in Nov-ember was €346m. Approvals mean banks have granted mortgages, but the money had yet to be drawn down.
The vast majority of the 2,010 mortgage approvals was for property purchase, with the rest for re-mortgages and top-ups.
Felix O'Regan of the Irish Banking Federation said: "This evidence of renewed mortgage market activity is welcome. Approvals data for December and the following months will enable us to establish a clearer picture of the trend."
International ratings agency Fitch said on Tuesday that prices could decline by another 20pc from their current levels, while variable rates are due to go up again.
Ongoing increases in mortgage arrears mean borrowers are effectively on strike, said Fitch. Despite this, there is likely to be a moderate rise in lending to first-time buyers this year.
Fitch, in a report on the global mortgage market, said that while a 20pc drop in property prices was possible, 10pc was more likely.