Number of home loans issued falls a massive 43%

JUST 28,000 mortgages were issued last year — a drop of 43% on the previous year.

The Irish Banking Federation/PWC mortgage market profile showed that 5,624 new mortgages worth €982 million were issued in the last quarter of 2010. The value of all mortgages for the year was €4.75 billion.

The volume of new lending in the fourth quarter was 22.5% lower than the third quarter.

First-time buyers and mover purchasers now account for 77% of the market by value and 67% by volume.

Irish Mortgage Corporation director Frank Conway said that since the fourth quarter of 2005, there has been a 90% drop in overall loan activity.

In quarter four 2005 there were 55,618 mortgages issued compared to just 5,624 in quarter four 2010.

The buy-to-let market fell 97% to just 238 loans last quarter. Also just 351 remortgages were approved last quarter, down 95%. The top-up market was down 93% while the first-time buyer market was down 79% to 2,318 mortgages.

“The mortgage market continues its long meltdown with all sectors of the market experiencing a continued contraction. There are fewer people across the board taking out mortgages,” said Mr Conway.

He said Ireland needs a mortgage bank that caters solely to the needs to residential mortgage customers and which is based in sound lending practices.

According to Central Bank figures, the annual rate of change in loans to households was down 5.1% in January, following an annual decline of 5.3% in December. Lending for consumption and other purposes was just over 15% lower last year.

Meanwhile, deposits from the Irish residential sector were 8% lower annually at the end of January. Deposits from Irish households were 5.5% lower over the 12 months ending January, whereas deposits from Irish non-financial corporates fell by 15.2% over the period.

Bloxham economist, Alan McQuaid said: “There is very little good news in these latest banking figures, with the annual rates of change in credit demand remaining in negative territory and no sign that the trend will change any time soon.

“Meanwhile, the outflow in deposits is another cause for concern.”

He said until the banking crisis is fully resolved and things improve on the labour market front then the supply and demand for credit will remain subdued, “severely hampering the recovery” of the economy as a whole.