Thursday 22 February 2018

New mortgage lending at lowest level in a decade

IBF chief denies fear of rate hikes is deterring customers

John Mulligan

The value of new mortgage lending in the first three months of this year was the lowest in almost a decade.

New mortgage lending slumped almost 39pc compared with the same period last year according to new figures released yesterday.

A report from the Irish Banking Federation (IBF) and PricewaterhouseCoopers revealed that 6,954 new mortgages were drawn down during the first three months of 2010, down from 9,946 in the previous quarter and down almost 37pc from 10,997 in the first quarter of 2009.

Net mortgage lending actually fell in the first quarter of 2010 as more mortgage debt was paid off by householders than was actually issued.

The total amount owed on residential mortgages in Ireland stood at €146.5bn at the end of March.

The report noted that first-time buyers comprised the biggest part of the mortgage market in Ireland, and accounted for 33.5pc of the loan volumes during the first quarter.

Top-up mortgages were the second-biggest category, at 27.7pc, while those securing a new loan to move home accounted for 21.7pc.

Re-mortgages formed 11.6pc of the loans drawn down in the first quarter.

The number of mortgages issued for house purchases peaked at nearly 111,000 in 2006 and had a combined value of €27.8bn, while total gross mortgage lending peaked that year at €40bn.

Pat Farrell, chief executive of the IBF, said the latest data showed that the rate of decline in new mortgage lending had slowed, but denied that fears of interest rate hikes by the banks could put potential borrowers off securing a mortgage or even topping up existing loans.

The country's top lenders had been heavily criticised for increasing their fixed- and standard-variable mortgage rates even as the European Central Bank had left its base rate unchanged at 1pc.

The banks have been forced to raise the rates as they try to balance market funding costs with the rates they charge their customers.

"I wouldn't say banks are arbitrarily putting up interest rates," said Mr Farrell, who added that the institutions had to reprice their mortgage books because of higher funding costs.

The report from the IBF and PWC showed that the average loan size during the first quarter of this year for first-time buyers was €201,000, while for re-mortgages it was €177,000 and for those moving home it was €248,000.

The average top-up loan in the quarter was €80,000 -- that's up from €78,000 in the first quarter last year. The average loan for first-time buyers had fallen about 9pc in the past year.

Irish Independent

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