Thursday 14 December 2017

Revealed: How many secured approval for mortgage - but couldn't find a home to buy

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Charlie Weston

Charlie Weston

A big gap has opened up between the numbers getting approved to take out a mortgage and those who end up drawing one down.

Experts said this reflects the chronic shortage of properties for sale.

Banking and Payments Federation figures show that more than 8,000 people were approved for a mortgage than actually drew one down in the year to June.

Both approvals and draw-down numbers continue to rise.

In the last year more than 35,000 potential buyers were approved for a mortgage.

However, over the same period the number actually drawing down a mortgage was just over 27,000.

"Both approvals and draw downs are clearly rising, but a mismatch is now opening up as approvals grow at a faster pace," said economist with Goodbody Stockbrokers, Dermot O'Leary.

"In percentage terms, this is the biggest gap since the data began in 2011."

The disparity between approvals and mortgage draw-down reflects the shortage of properties for sale, and the fact that buyers tend to get approval from a number of lenders when they are trying to buy in the hope that some will offer them a higher mortgage than others.

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"The scarcity of new supply coming to the market, relative to demand, is likely to be the main reason for this trend," said Mr O'Leary.

"In this environment it is inevitable that price inflation has accelerated."

The figures from the Banking and Payments Federation Ireland (BPFI) show that 8,000 mortgages were drawn down in the April to June period.

These had a value of €1.65bn, and represent a 17.6pc rise in the number of loans compared with a year ago.

First-time buyers are driving the rise in the mortgage market.

They have been boosted this year by the relaxation of the deposit rules from the Central Bank and the introduction of the Government's Help-to-Buy scheme. New buyers accounted for half of the number of mortgages issued.

Combined, first-time buyers and mover-purchasers accounted for 85pc of the total value of mortgages drawn down.

Meanwhile, there has been a surge in the number of heavily indebted people applying for an official debt deal.

Insolvency

There were 1,259 new applications in the second quarter of this year for arrangements, according to the Insolvency Service. This is an increase of 71pc on the same period last year.

Most were to deal with mortgages.

They are seeking a personal insolvency arrangement (PIA), which provides for the restructuring or settlement of mortgage debts up to €3m.

This rise comes about following the introduction of Abhaile, the State scheme that provides free financial and legal advice for those in debt distress.

Between April and June there was a 26pc rise in protective certificates issued.

This was an increase of more 617.

The issuing of a protective certificate is the first stage of the debt solution process.

And there was a 22pc rise in approved arrangements to 323.

This is the final stage in the process.

Irish Independent

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