Tuesday 30 May 2017

Strong rise in number approved for mortgages in October

An average of 3,100 people were approved for a mortgage each month since the summer. Photo: Reuters
An average of 3,100 people were approved for a mortgage each month since the summer. Photo: Reuters
Charlie Weston

Charlie Weston

There was a strong rise in the number of people approved for a mortgage in October, as the home-loan market continues to improve.

And there are expectations that home-lending will pick up further due to the Government’s help-to-buy scheme and changes to Central Bank rules.

An average of 3,100 people were approved for a mortgage each month since the summer.

Half of these were first-time buyers, according to new figures from the Irish Banking and Payments Federation.

The figures show the value of mortgage approvals in October rose by 29pc compared with the same month a year ago.

But this was a slow-down on the even stronger mortgage approval rises in September and August.

First-time buyers account for the biggest share of approvals. Close to 47pc of those approved for a mortgage were first-time buyers.

However, approvals for movers are now growing at a faster pace than those for new buyers.

Those moving house accounted for a third of people being approved for a home loan. Some 1,080 people were approved for a mortgage to move home in October, a rise of 31pc on the same month last year.

Economist with Davy Stockbrokers David McNamara said the figures show mortgage approvals softening in October.

He said: “New loans worth €621m were approved in the month compared to €663m in September and a peak of €692m in July. This might be in part due to seasonality as the housing market winds down towards the year-end.”

Alan McQuaid of Merrion Stockbrokers said that with the Central Bank easing its lending restrictions for first-time home buyers, mortgage approvals should pick up in the coming months.

However, that will likely keep upward pressure on house prices in the short-term until the supply issue is sorted out.

Goodbody’s economic analyst Dermot O’Leary said both the Government’s buyer-support scheme and the Central Bank’s easing of its lending rules would boost demand.

He said: “Both of these policy developments will support mortgage demand.”

But he added that mortgage demand was already picking up in advance of these policy developments.

He said the brokerage was forecasting new lending growth of 19pc in 2017.

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