Tuesday 20 February 2018

First-time buyers lead the pack as numbers getting go ahead for a mortgage surge

The number of home buyers seeking mortgage approval rocketed by 42pc (stock photo)
The number of home buyers seeking mortgage approval rocketed by 42pc (stock photo)

Charlie Weston Personal Finance Editor

There has been a rush to get approved for a mortgage, with first-time buyers to the fore.

This is putting pressure on house prices, which are now expected to rise by 10pc this year.

Changes to Central Bank lending rules and the introduction of the Government’s new help-to-buy scheme  at the start of the year have resulted in a surge in people applying to take out a home loan.

The number of home buyers seeking mortgage approval rocketed by 42pc in the three months to February 2017.

Just over 2,800 people got the go-ahead from their bank to borrow to buy a home in the three months that ended in February, according to figures from the Banking and Payments Federation.

This was up from almost 2,000 in the same month a year earlier, a rise of 42pc.

The value of mortgages approved per month in the three months ending in February was €585m.

Half of this was accounted for by first-time buyers and a third by mover purchasers.

The value of mortgage approvals rose by 54.4pc in the year.

In February, the number of first-time buyer mortgages approved grew by 61pc.

Changes to Central Bank lending limits for first-time buyers took effect from the start of the year, and the help-to-buy tax rebate was formally launched at the same time.

Analyst with specialist bank Investec Philip O’Sullivan said: “It appears that recent measures introduced to make the mortgage market more accessible for first-time buyers are having a marked impact.”

The average loan approved for all borrowers rose to a fresh high of €208,200, up 11pc on the year.

For first-time buyers, the average loan approved was €206,500 in February, up 15.pc from the €179,300 recorded last year.

Economist with Davy Stockbrokers Conall Mac Coille said first-time buyers were now borrowing more.

“Given the strong momentum early in the year, there is a significant possibility that Irish house price inflation could exceed 10pc in 2017,” he said in a note to investors.

Goodbody economist Dermot O’Leary questioned whether or not housing supply will be able to match the strong growth in the numbers getting approved to take out a mortgage.

“Clearly, a significant deficit in housing will continue to exist, thus pushing prices up further,” he said.

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