Mortgage lending up by over 10%

The volume of new mortgage lending increased by over 10%, on a year-on-year basis, during the third quarter of the year — the first time any quarter has shown an annualised rise for six years.

New home-loan figures — jointly issued by the Irish Banking Federation (IBF) and PwC — show a 10.4% annualised increase in the number of new mortgages issued between the beginning of July and the end of September. This marked the first year-on-year increase in mortgage lending since the third quarter of 2006.

When compared to the preceding three month period, the increase in third quarter lending was 23.5%.

IBF public affairs director Felix O’Regan said the upward trend seen in the last quarter might be sustainable. “Whereas data from previous quarters showed that contraction in activity continued to slow, the third quarter data is showing actual growth in activity — something we haven’t seen in some time,” he said.

“This is a very welcome trend and one we might hope to see sustained, particularly in light of reports from market analysts indicating a stabilisation in average house prices in Dublin, for example.”

A total of 3,983 new mortgages — at a combined value of €663m — were issued during the third quarter. In the year to date, just under 10,000 new mortgages have been issued — with house movers and first-time buyers making up the bulk of the market and accounting for eight out of ten mortgages issued.

The latest EBS/DKM Affordability Index, also published yesterday, showed that the cost of funding a mortgage works out at 11.7% of a working couple’s joint annual disposable income; down from 12.8% this time last year and a vast improvement on the 26.4% figure quoted in 2006.

However, the Professional Insurance Brokers’ Association struck a cautious note. Chief operations officer Rachel Doyle suggested there is a possibility of banks further hiking interest rates, which “will have a dampening effect on the market”.

Ms Doyle said: “The question is, how much of the increased activity is attributable to the ending of mortgage interest tax relief in December. A total of 3,983 new mortgages being issued in the third quarter is not a great figure, given the pent-up demand there is in the market from first-time buyers in particular.”