Mortgage approvals down 9% in August but growing year on year

Mortgage approvals fell more than 9 per cent in August following a record high in July, but continued to show growth year on year, new data from Banking & Payments Federation Ireland (BPFI).

Almost €13.4 billion worth of mortgages were approved in the first eight months of the year.

Mortgages have surged in recent months as pandemic-related factors, such as increased savings, enticed more home buyers into the market.

The figures from August showed 4,572 mortgages were approved during the month, up 18 per cent compared with the same month of 2020. First-time buyers made up more than half the total for the month, at 53.8 per cent, while mover purchasers accounted for just over a quarter.

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The value of mortgage approvals fell almost 10 per cent compared with July and 22.6 per cent year on year, totalling €1.16 billion. First-time buyers accounted for €622 million, with movers on €351 million.

"Looking at the annualised figures which allows us to more accurately assess emerging key trends, there were 54,208 mortgage approvals in the 12 months ending August 2021, valued at almost €13.4 billion – also the highest volume and value since the data series began," Ali Ugur, BPFI's chief economist, said. "The annualised figures reached new highs in each of the [first-time buyer], mover purchase and remortgage or switcher segments."

“These are significant figures and very much signal a robust pipeline for drawdown activity later in the year,” he said.

Continued growth

First-time buyers showed particular growth during August.

“Approvals activity often peaks during summer but the latest mortgage approvals for August show continued growth compared with 2020, especially for [first-time buyer] mortgages,” , Mr Ugur said.

“In total almost €1.2 billion in mortgages were approved, 22.6 per cent more than in August 2020. These were the highest volumes and values in August since the data series began.”

While the property transactions came to a temporary halt during the first lockdown, sales have since picked up.

A combination of low interest rates, the demand for more spacious properties during the pandemic and pent-up savings have combined to lead to increased buying activity in the market.

There are also significantly fewer homes being put up for sale.

That has led to a rise in prices. New data from the Central Statistics Office showed annual house price inflation jumped to 8.6 per cent in July, the fastest level of growth seen in the market in almost three years.