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Fall-off in mortgage approval for new buyers, but number of people switching lenders grows

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More and more people are seeking to switch mortgage provider

More and more people are seeking to switch mortgage provider

More and more people are seeking to switch mortgage provider

The number of first-time buyers approved for a mortgage has fallen to its lowest level in three years.

But the numbers approved for a mortgage switch continue to surge, according to the October figures from the Banking and Payments Federation Ireland (BPFI), the main representative body for the banking and financial services sector in Ireland.

The number of people approved for a loan to move house has also dropped, with both first-time buyer and mover-purchaser approvals now at pre-Covid levels.

Higher mortgage rates and the cost-of-living squeeze have been blamed by finance experts for the fall in the numbers approved for a first mortgage and the dip in mover-purchaser approvals.

Higher property values have surpassed Celtic Tiger levels

The figures may also point to a slow-down in the property market, where prices have risen by double-digit percentage levels up to now.

BPFI figures show 2,363 first-time buyers were approved for a mortgage in October. This is down almost 7pc on the same month last year.

But new buyers account for 44pc of the total number of mortgage approvals for October this year.

Some 1,000 mover-purchaser mortgages were approved last month, down 7pc on the same month last year.

However, there continues to be a huge jump in those customers seeking to switch mortgage provider.

Switching activity was up 124pc in volume terms on the year. Close to 2,000 homeowners were approved for a switch, with the value of these approvals put at close to €500m.

This represents around a third of the number and the value of mortgage approvals for the month.

It is the first time in more than a decade that switchers have represented a third of the value and volume of approvals.

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Existing homeowners are seeking lower fixed rates on their mortgages by switching.

And some of the switching is a result of both Ulster Bank and KBC leaving the market.

The sale of Ulster Bank’s non-tracker mortgages to Permanent TSB and of their tracker mortgages to AIB, plus the sale of the KBC mortgage book to Bank of Ireland, have prompted some customers to switch to another lender.

Overall, 5,349 mortgages were approved in October.

Not all of those approved for a mortgage will draw it down. In the current market they may find that they are unable to afford a property, or they may have approvals from a number of lenders but will use only one.

BPFI chief executive Brian Hayes said the figures showed continued growth in mortgage activity being driven solely by a sharp increase in non-purchase mortgages, mainly switching.

“It is clear that customers are actively managing their mortgages by seeking out new deals to minimise the impact of European Central Bank interest rate decisions,” said Mr Hayes.

He said the numbers of first-time buyers and movers approved for a home loans were back at pre-Covid levels.

But the value of the approvals for movers and new buyers has stayed close to a peak of €7.7bn, reflecting higher property values, which have surpassed Celtic Tiger levels.​​​​​​​


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