Banks ‘unlikely to meet mortgage goals’

The main banks are unlikely to meet previously stated mortgage lending predictions for this year, one industry representative has warned, despite new approval figures suggesting signs of market growth.

A total of 1,433 new mortgages were approved by lenders last month, representing a near 23% rise on March — and an almost 9% year-on-year increase.

The April figures, published yesterday by the Irish Banking Federation, show that the combined value of new home loan approvals amounted to €240m, during the month. Recent IBF data showed that, during the first three months of this year, 2,068 new mortgages were issued, representing a combined value of €331m.

IBF director of public affairs Felix O’Regan welcomed the figures as “evidence of renewed activity in the mortgage market”.

“Following a more recent slowdown in activity in the first quarter of this year — due to seasonal factors and the expiration of mortgage interest relief — the latest approval figures provide a firm indication of underlying growth in the market.”

However, the Professional Insurance Brokers’ Association said the new lending figures give no cause for celebration, saying any improvement is still not close to meeting current demand.

“Firstly, it’s worth remembering that mortgage lending has dropped 95% from peak. Secondly, the figures are for approvals and the suspicion is that there may be quite a gap between approvals and draw-down,” said PIBA chief operations officer Rachel Doyle, who said too stringent conditions are still being imposed on borrowers who have the capacity to repay loans.

Ciaran Phelan, head of the Irish Brokers’ Association, said it “seems unlikely” the rescued banks will achieve their combined mortgage lending predictions for 2013.

Speculation arose at the turn of the year that we could see a 24% rise in new mortgages being issued this year; on the back of AIB nearly doubling its 2013 house purchase lending target to €2bn and Bank of Ireland announcing it had a €2bn mortgage lending fund in place. Permanent TSB hopes to up its lending levels by nine times what it did last year.