Monday 11 December 2017

Average first-time buyer gets €162,000 mortgage

UNCERTAIN: The rate of mortgage lending is at a 40-year low
UNCERTAIN: The rate of mortgage lending is at a 40-year low
Charlie Weston

Charlie Weston

First-time buyers are borrowing an average mortgage of €162,000 as lending hits its highest level in four years.

There has been a strong rise in the number of new mortgages issued by banks, as the housing market edges back to normality.

Banks said they issued just over 4,800 new mortgages in the second three months of this year. This is up 1,574 on the same three-month period last year, a rise of almost 50pc.

First-time buyers accounted for around half of the new mortgages, according to figures released by the Irish Banking Federation.

Movers accounted for most of the remainder.

The average loan size was €170,000, with first-time buyers borrowing an average of €162,000.

The value of mortgages drawn down in April to June was €820m, up almost 60pc on the same quarter last year.

But the number of mortgages drawn down continues to be far less than the number of home-loans approved by banks.

Banking analyst with Goodbody Stockbrokers Eamonn Hughes said the market was on target to record €3.75bn in mortgage lending this year.

This is up 50pc on the €2.5bn of estimated mortgage lending last year.

Mr Hughes said that the market was recovering, but was still some way off "normal".

"The continuation of the strong momentum into the second quarter is indicative that the recovery in the mortgage market is taking hold, albeit from a low base."

He said he expected home-loan lending to rise by a third this year.

"While this will be the largest amount of mortgage lending since 2010, we believe this is just half of a 'normal' level of lending," Mr Hughes said.

The banking analyst said the numbers of people approved for a mortgage continues to race ahead of the number of mortgages actually drawn down.

This points to a chronic lack of supply of family-type homes, especially in Dublin. Buyers were being priced out of the market.

However, there is no evidence that banks have loosened lending conditions. Surveys from the Central Bank show that banks lending standards have not changed, even though demand for mortgages has risen.


The banking mortgage figures show a pick-up in the number of investor mortgages, something that was absent from the market in the past few years.

Investors took out 188 mortgages in the April to June period. Most investors tend to be cash purchasers.

Meanwhile, KBC Bank has reduced by up to 0.5pc the cost of its fixed-rate mortgages for new buyers and those switching their mortgage to it.

Its two-year fixed rate has gone down by 0.20pc to 4pc for those borrowing less than 60pc of the value of the home.

The Belgian-owned bank said earlier this month it was reducing its variable rate by 0.2pc for the life of the loan for new buyers and switchers who also take out a current account.

Last week, the Central Bank found that new mortgage rates are higher here than the average in the rest of the eurozone.

Irish Independent

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