AIB to double mortgage lending

State-controlled AIB plans to do €2bn in mortgage lending this year, which is double the €1bn target the bank had last year.

In the end, AIB sanctioned €1.5bn in 2012, with €1.2bn drawn down by the end of December. This was a 63% increase on the previous year. The average price paid by a first-time buyer was €160,000.

In 2012 AIB provided 45% of all mortgages in Ireland with an approval rate of seven out of 10 applicants.

The country has seen an exodus of mortgage lenders over the past few years.

House prices are showing tentative signs of stabilisation following five years of steep falls.

AIB is still struggling with huge mortgage arrears. Last week, in an appearance before the Oireachtas Finance Committee, Central Bank governor Patrick Honohan, said he was not satisfied with the pace at which the covered banks were dealing with distressed customers.

Speaking to RTE’s News at One programme yesterday, AIB’s head of mortgages, Jim O’Keeffe, said his bank had extended forebearance terms for 33,000 customers. However, he declined to say how many of these involved a writedown of the principal amount.

Ciaran Phelan, CEO of the Irish Brokers Association, said: “AIB’s decision to increase the level of mortgage lending is excellent news for those considering buying or trading up. The market has suffered a dearth of mortgage credit for almost five years so it about time that lenders re-engaged with would-be homeowners in a meaningful manner. We estimate that the volume of mortgage lending could now hit €3.5-€4bn this year, which is a significant increase over the estimated €2.5bn in 2012.”

Mr O’Keeffe said: “AIB has seen very positive trends in the 2012 figures. We are exceeding our mortgage targets, and as our ambitions for 2013 show we continue to be very much open for business. Our customers have told us that the key item for them is to be fully supported through the mortgage journey and we are launching a new campaign to ensure this continues to happen.”

The bank will provide a dedicated mortgage co-ordinator in every branch. It has launched a comprehensive guide for first-time buyers and has set up a dedicated website to deal with customers questions and answers.

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