Irish mortgage lending declined 20 per cent in the first quarter as increased borrowing costs deterred potential homebuyers.
New loans to homebuyers fell to €6.3 billion ($9.7 billion) from €7.8 billion a year earlier, according to an Irish Banking Federation report published today. The number of loans fell by 25 per cent to 28,508.
Irish banks including Allied Irish Banks and Irish Life & Permanent are raising lending rates as their own funding costs increase, deepening a property slump.
Home prices fell 8.9 per cent in the year through March, after quadrupling in the previous decade.
"Conditions in the mortgage market remain challenging," IBF Chief Executive Officer Pat Farrell said in the report. "On the supply side, credit availability has tightened."
The drop in the volume of mortgages issued was partly mitigated by an increase in the number of people switching mortgages as competition between lenders increases.
The number of mortgages issued to first-time homebuyers, property investors and people refinancing home loans all declined in the quarter from a year earlier.
People switching mortgages accounted for 22 per cent of all home loans in the period, up from 13 per cent a year earlier.
Bloomberg