New mortgage lending jumps 22% to €3.75bn in first six months of 2018

New mortgage lending jumped by 22 per cent to €3.75 billion in the first six months of 2018, according to new figures from the Central Bank of Ireland.

The increase comes despite tighter lending rules introduced in 2015 to guard against another property-driven credit bubble.

The figures also show that consumers here are borrowing more to purchase more expensive homes, reflecting the acceleration in property values.

The research, based on over 17,000 loans from the State’s six main lenders, shows the average loan taken out by a first-time buyer in the first six months of 2018 was €216,505. This was €16,825 or 8 per cent higher than in the corresponding period last year.

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The average value of properties being purchased by first-time buyers was put at €287,081, which was €20,596 or 8 per cent up on the previous period.

The figures also suggested that the average income of first-time buyers here was now €73,272, which was 4 per cent higher than last year.

Second and subsequent borrowers were also borrowing more to acquire costlier properties. The average loan size in this category was €234,226, which was €4,041 or 1.7 per cent higher than in 2017.

The average value of properties being purchased by second and subsequent borrowers was €412,124, which was 2.7 per cent higher than the previous period.

The Central Bank’s report also noted that the average loan-to-value (LTV) of first-time buyers was just under 80 per cent while the average loan-to-income (LTI) was 3.1.

For second and subsequent borrowers, the average LTV was just under 67 per cent while the average LTI was 2.6 while the average borrower age increased from 41 to 42 years old.

Separate Central Bank figures showed household debt as a percentage of disposable income declined to 133 in the first quarter of this year, its lowest level since 2004.

Despite the improvement, Irish households remain the fourth most indebted in the EU.

The figures show the share of new-fixed rate lending continued to rise with fixed rates of three years and over representing 48 per cent of new primary-dwelling-house (PDH) lending.

The figures showed approximately 35 per cent of purchases by first-time buyers in the second quarter were for a newly constructed properties, in comparison with 28 per cent for second and subsequent borrowers.

The share of non-mortgaged household transactions continues to decline but remains substantial at 29.5 per cent, the report said.

The figures also showed the number and share of loans in arrears continues to fall with 63,402 loans classified as being in arrears of over 90 days in the second quarter, down from 72,610 in the second quarter of 2017.