Strong growth in mortgage approvals and drawdowns

The number of mortgage applications approved by lenders rose 4.8 per cent last month as drawdowns by borrowers jumped 8.8 per cent in the second quarter.

New figures supplied by Banking and Payment Federation Ireland (BPFI) show 10,157 new mortgages to the value of €2.25 billion were drawn down in the April to June period. This compares to 9,339 drawdowns a year earlier at a value of €2.01 billion.

It marks a sharp increase versus the first three months of 2019, with volumes up 18.4 per cent and the value of drawdowns jumping 19.4 per cent.

First-time buyers remained the single largest segment by volume, accounting for 49.6 per cent of all drawdowns recorded in the second quarter.

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Mortgage drawdown volumes for property purchase were up 8.2 per cent year-on-year to 7,987, with first-time buyer drawdowns increasing 10.8 per cent to 5,040. Mover purchase drawdown volumes were up 6 per cent to 2,644.

Residential investment letting volumes decreased by 10.6 per cent year-on-year, to 303, while switching or remortgaging drawdowns were up 11 per cent to 1,447.

The value of mortgage drawdowns for property purchase increased by 11.4 per cent versus the same quarter a year earlier, to €1.85 billion. First-time buyers accounted for €1.14 billion of the total.

New properties

The number of first-time buyer mortgages for new properties rose by 3.4 per cent year-on-year while drawdowns for second-hand homes increased by 14.7 per cent, the data shows.

Supplementary figures from BPFI indicate that 4,478 mortgages were approved by lenders last month for properties valued at a combined €1.03 billion.

There were 3,692 purchase mortgage approvals, valued at €901 million in June 2019. Purchase mortgage approval activity was up by 5.1 per cent year-on-year in volume terms.

Approvals for property purchase increased by 5.1 per cent year-on-year to 3,692, with first-time buyers accounting for 2,335 of all approvals made. This is an increase of 11.6 per cent versus the same quarter a year earlier.

Mover purchase approval volumes decreased by 1.3 per cent to 1,233. Approvals for residential investment letting were down 27.1 per cent to just 124 while approvals for remortgaging or switching rose 2.7 per cent.

‘Good growth’

BPFI data shows there were 47,560 mortgage approvals in the 12 months to the end of June, valued at €10.6 billion.

The growth in mortgage-switching over the last 12 months supports our assessment showing activity in this area returning to a level last seen in 2008

“The number and value of mortgages actually drawn down by borrowers during the second quarter of 2019 show good growth on corresponding 2018 activity. This should come as no surprise, as it reflects the growth during the first half of the year in the number of mortgages approved for borrowers by lenders – largely driven by first-time buyers,” said BPFI director of public affairs Felix O’Regan.

“The growth in mortgage-switching over the last 12 months supports our assessment showing activity in this area returning to a level last seen in 2008. Mortgage approvals in the year to June show good growth at 4.8 per cent, while activity is down on the preceding month of May – which could be down to seasonality,” he added.