Irish News

Wednesday 20 August 2014

Banks plan to double mortgage lending in 2013

Charlie Weston Personal Finance Editor

Published 24/01/2013 | 05:00

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BANKS are on course to more than double the value of their mortgage lending this year.

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The move could translate into more than 18,000 new mortgages being issued, a 24pc hike on last year's figure.

It would be a major boost for the property market, which has been crippled by a lack of mortgage lending in recent years.

AIB became the latest lender to say it would significantly ramp up the number of mortgages it will provide this year.

The bank, which includes former building society EBS, said its lending target for 2013 was €2bn, up from €1bn last year.

The announcement comes just days after rival Bank of Ireland said it had a €2bn fund in place for mortgage lending.

And earlier this month Permanent TSB said it would increase mortgage lending five-fold this year to €350m.

If all of this is loaned by the three banks, it would mean a more than doubling of the value of mortgages being issued this year, compared with 2012.

With Ulster Bank and KBC Bank also engaged in some lending, there could be as much as €4.5bn loaned out this year.

This would be more than double the estimated total drawn down last year, according to Goodbody Stockbrokers economist Dermot O'Leary.

He said this was likely to translate into around 18,000 new mortgages, up from an estimated 14,500 last year.

Targets

"If all of this lending actually happens, it will represent a huge increase from recent years," he added.

AIB said it provided 45pc of all mortgages in Ireland last year, with the average first-time buyer borrowing €160,000.

Head of mortgages Jim O'Keeffe said last year AIB exceeded its own targets for mortgage lending, with €1.5bn being approved for new home loans. He said a total of €1.2bn of this was drawn down by customers.

The Irish Brokers Association's Ciaran Phelan said the property market was suffering from a dearth of mortgage credit for the last five years.

Meanwhile, a charity set up to help people at risk of losing their homes has called on the Government to double mortgage tax relief for those who bought during the boom.

Phoenix Project Ireland told TDs and senators that 140,000 Irish family homes are in arrears and face repossession if there is no change in regulation.

It called on Government to raise mortgage tax relief to 60pc on loans taken out between 2004 and 2008. It said this would reduce mortgage interest payments by up to 30pc.

Founder William Prior told an Oireachtas committee the charity had received more than 12,000 calls from distressed people desperately trying to keep a roof over their family's head.

Irish Independent

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