Mortgage lending drops but rate of decline slows

MORTGAGE lending dropped again during the third quarter of this year, but the quarterly rate of decline has slowed significantly since last year, prompting hope that the market may soon pick up.

The latest quarterly Mortgage Market Profile – jointly published by the Irish Banking Federation (IBF) and PricewaterhouseCoopers (PwC) – shows that 12,189 new mortgages were issued between the beginning of July and the end of September, with a combined worth of €2.14 billion.

In volume terms, this represented a 3.9% quarter-by-quarter decline and a 56.4% year-on-year decline, while value was down by 1.3% on the previous quarter and dropped by 62.2% on a year-on-year basis.

The volume of mortgages granted had fallen from just under 28,000 in the third quarter of last year to just under 11,000 by the first quarter of this year, before picking up in the second quarter of this year.

Of significance in the latest figures was the growth in lending to first-time buyers for the second consecutive quarter. The first-time-buyers’ share of the Irish mortgage market has now gone from 19.1% to just shy of 29% in the past two years.

IBF chief executive Pat Farrell said that available credit is still greater than consumer demand but that the slowdown in lending decline – while a move in the right direction, would need to be judged on the back of a number of quarterly timeframes before proof of any real upturn could be gauged.

“While the overall level of mortgage lending in the third quarter shows little change from the previous quarter, the rate of decline in activity that has been so evident over recent quarters now appears to be moderating.

“Significantly, we have seen an increase of nearly 500 over the previous quarter in the number of mortgages issued to first-time buyers and this important segment continues to build market share,” he added.

However, the Professional Insurance Brokers Association (PIBA) reacted strongly to yesterday’s figures, saying that they represented “bank propaganda” and glossed over reality.

“There is a freeze on mortgage and other lending that is preventing any element of normality returning to the market,” said PIBA Mortgage Services director Rachel Doyle.

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