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Mortgage lending plunges by 66pc in first quarter

THE mortgage market slowed dramatically in the first three months of the year.

The number of new home loans approved by banks and the amount that was borrowed both dropped by around two-thirds from the levels seen in the previous three months.

The latest figures from the Irish Banking Federation (IBF) and accountants PwC show that in the early part of this year lending was running at lower levels than at any time in 2012.

There were just over 2,000 mortgages approved in the first three months of the year and the amount borrowed was €331m. It is down from 6,000 mortgages approved in the final three months of 2012, when the total borrowed was €999m.

In the first three months of 2012, which is a better comparison, 2,600 mortgages were approved and the total amount borrowed was €450m.

It's the second recent blow to hopes that the housing market was emerging from a five-year slump. Data published at the end of April showed house prices declined nationally in the early part of the year, though they were up in Dublin.

The IBF's Felix O'Regan said the latest lending figures reflect the decision to end mortgage interest relief for house buyers at the end of 2012. Earlier data showed a surge in mortgage lending at the end of last year as buyers snapped up houses before the tax break was scrapped. The latest figures also reflect the more normal slowdown in house sales at the start of each year, Mr O'Regan said. But while the first three months of the year are traditionally a quiet time for house sales, the 2013 figures show a 20pc drop even compared to the same period last year.


Conall Mac Coille of Davy Stockbrokers said the end of mortgage interest relief had distorted the market. But he said taking in the whole six-month period from the start of October to the end of March, mortgage approvals were up about 20pc compared to a year earlier.

Yesterday Trevor Grant, who is the chairman of Expert Mortgage Advisors, which represents brokers, said the latest decline in mortgage market activity is "really worrying."

Irish Independent