Positive signs that 'mortgage market growth will continue'
Published 23/12/2016 | 02:30
The number of people approved for a mortgage shot up in November, as the home-loan market continued to recover.
There was a 30pc rise in the numbers getting approval from a bank to borrow in the three months to November.
The market is now expected to grow another 25pc next year.
Most of the increase was accounted for by first-time buyers and movers.
New figures from the banks show that almost 3,400 people were approved to take out a mortgage in the three months up to November.
Almost half of those cleared to draw down a mortgage were first-time buyers.
Not all approvals translate into mortgage drawdowns as buyers with a mortgage often struggle to compete with cash buyers.
Some 3,377 mortgages were approved on average in the three-month period, with a collective value of €680m, according to the Banking and Payments Federation Ireland data.
The pick-up comes ahead of a relaxation of Central Bank mortgage restrictions for first-time buyers that take effect from the start of next year, and a new Government incentive for new buyers.
But Dermot O'Leary, an economist at Goodbody Stockbrokers, said the Government's help-to-buy scheme was unlikely to have impacted the figures.
The scheme was only formally announced in October's Budget.
He said the scheme would not have had much impact on the figures as there was not much clarity around the tax rebate plan until relatively recently.
However, he added there may have been an element of pent-up demand being reflected in the November approvals, as potential homeowners were waiting on clarity around budget day measures before proceeding with purchases.
Mr O'Leary said: "The latest mortgage approval trends bode well for mortgage activity in Ireland in 2017. We are forecasting growth of 19pc in mortgage drawdowns in 2017.
"Recent approval trends suggest that this forecast might prove to be conservative."
Goodbody is forecasting a rise of 19pc in mortgage drawdowns in 2017.
However, Mr O'Leary said recent approval trends suggest that this forecast might prove to be conservative.
Ronan Dunphy, chief economist with specialist bank Investec, said the figures indicate that lending is growing.
"This data is consistent with our expectation for a total lending drawdown volume of over €5.5bn in 2016, which would equate to a 14pc increase year-on-year."
He said the increase in mortgage approvals fits with Investec's expectation of very strong mortgage lending growth in 2017.
This was particularly because of signs of a re-acceleration of house market prices and the help-to-buy scheme and easing of Central Bank lending limits.
The help-to-buy scheme will mean first-time buyers can recoup up to €20,000 in a tax refund to put towards the cost of purchasing a property.
Mr Dunphy is now forecasting the value of new mortgage lending will rise to €7bn next year, an increase of 25pc on the total for this year.
The Central Bank's easing of lending restrictions for first-time buyers and the impact of the help-to-buy scheme are set to keep upward pressure on house prices in the short-term until the supply issue is sorted out, experts said.
From next month, first-time buyers will no longer have to have a 20pc deposit for amounts borrowed over €220,000.
Central Bank Governor Philip Lane said he decided to alter the mortgage rules in response to rising house prices and higher incomes.