House shortage to drag on mortgage lending

Mortgage lending values are expected to remain stable at just over €3bn this year, with growth slowed by a shortage of available properties and the lingering arrears crisis rather than a lack of available credit, one market expert has estimated.

Data from the Irish Banking Federation show 18,520 mortgages were approved in 2013, a rise of just over 4% on 2012. The combined value of such lending — the vast majority of which was for house purchases — amounted to €3.2bn.

In December alone, 1,762 mortgages were approved, to the value of €317m — 93% of which were for house purchases.

Last month’s volume represented a 3% annualised increase, although on a monthly basis the figure was down by just over 2%. The value of approvals was down by 1.2% on a monthly basis in December, but was up by over 10% year-on-year.

“With November traditionally the peak month for mortgage activity, the month-on-month decline in approvals between November and December is to be expected,” said IBF chief Noel Brett.

“Banks are well positioned to lend to customers who meet the criteria for a mortgage — the key consideration being the borrower’s capacity to repay.”

Trevor Grant, chairman of the Association of Expert Mortgage Advisers, said: “We believe that, in the context of a lack of suitable property supply, the mortgage market should exceed €3bn in 2014. Based on the demographics, the optimum size for Ireland’s mortgage market is now between €8bn and €10bn.”