Report finds untapped mortgage demand

MORTGAGE lenders have plenty of scope to grow their lending significantly provided they target the untapped demand in the sector.

That is one of the conclusions of a new report commissioned by Homeloan Management entitled A Recipe for Change and Growth.

Carried out by Dr Brian Lucey, a lecturer in finance at Trinity College Dublin, he says the market is robust and gearing up for significant change.

Even if the Celtic Tiger boom has ended, Dr Lucey said economic growth is forecast to continue at a rate between 3% and 5% in the years ahead, which are levels that are a good deal better than the European average.

Overall the profile of the population, boosted by strong migration, suggests those selling mortgages are looking at a very positive environment overall, Dr Lucey said.

Looking to where the untapped opportunities lie, Dr Lucey identified under-exploited areas as those who do not have "the credit history to obtain a standard mortgage either because of past credit problems or perhaps because they are recent migrants to Ireland with no credit history or do not have a full-time salaried job" as a big untapped home loan market segment.

Dr Lucey predicted other segments of the market are opening up and will provide significant opportunities in the years ahead, such as:

Investment mortgage loans to facilitate purchase of second or holiday homes;

Re-mortgaging, as borrowers seek better deals as competition opens up;

100% mortgage deals already given tacit approval by the Financial Services Regulator;

Equity release schemes, as borrowers look to release some of the value of their properties to fund other needs, including pension requirements.

As demand continues, Dr Lucey also rules out the prospects of a house price bubble, on the grounds that increases have not been out of line with historic trends, especially those seen in the late 1970s and late 1980s.

The Central Bank has also concluded house prices are not out of line with fundamentals, he said.

Dr Lucey also cited the cultural affinity for house ownership in Ireland the highest level of home ownership in the EU.