The number of mortgage approvals in Ireland has experienced a third consecutive month of decline, as the European Central Bank’s (ECB) interest rate campaign continues to impact the broader housing market. New figures from the banking industry indicate a nearly 10% annual decrease in mortgage approvals, with a total of 4,747 mortgages approved, marking a three-month low.
Despite this slump, first-time buyers have shown strong activity in the market, accounting for over 61% of total mortgage approvals, according to the July Mortgage Approval report by the Banking and Payments Federation Ireland (BPFI). The report also reveals that volumes and values for first-time buyer mortgage approvals rose by 22.8% and 26.7% respectively, year-on-year in July 2023. This marks the fifth consecutive month of year-on-year growth for first-time buyers.
Ian Lawlor, Managing Director of Lotus Investment Group, attributes the growth in first-time buyers to latent demand in the sector and the increasing availability of new homes. He points out that Ireland’s population is growing at a faster rate than its housing stock, making it unsurprising that those who can afford to buy are doing so.
Despite rising prices, Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors, suggests that it is still more cost-effective to buy a home than to rent. He highlights the disadvantages of renting, such as the risk of being forced to move if the landlord decides to sell, and the inability to personalize the living space. Grant also notes that strong income and employment prospects make banks more willing to lend to first-time buyers.
In addition to first-time buyers, mover-purchasers have seen a 6.8% increase in mortgage approvals, while residential investment letting has risen by over 11% annually. However, annual switching/re-mortgaging activity has decreased significantly by more than 78% to 332, with only a marginal increase from the previous month. On the other hand, top-up approval values have risen by 48.5% annually to €33 million.
With uncertainty surrounding the ECB’s September meeting, the nine consecutive interest rate hikes have resulted in the highest annual value of mover purchase approvals since the series began, reaching nearly €3.9 billion in the twelve months to July 2023. Furthermore, the average mover purchase approval exceeded €340,000 for the first time in July 2023, reaching €340,957.
Overall, the volume of purchase mortgage approvals grew by just under 18%, with the value of activity increasing by 22% in the same period. In July 2023, there were 136 purchase mortgage approvals, valued at €1.24 billion. On an annual basis, a total of 55,246 mortgage approvals were reported, with a total value of €15.4 billion.