Half-a-billion in mortgages issued

More than half-a-billion in new mortgages was issued by Irish banks between April and June, up 56% on the first three months of the year, but only a 0.1% increase on the same period last year.

The report by the Irish Banking Federation and PriceWaterhouseCoopers noted that the first quarter is traditionally the weakest quarter of the year, followed by a recovery in the second quarter.

This year was the first year since 2006 that year-on-year growth has been recorded in the second year although the growth was relatively anaemic at 0.1%.

The data showed that a total of 3,229 mortgages to the value of €518m were issued in the April to June period. Home purchasers accounted for more than 90% of all new mortgage credit with the remaining being made up of top-up mortgages and re-mortgaging.

Director of Opes Wealth Trust, Frank Kenny, said the levels of mortgage draw-downs was still a long way off what would constitute a functioning mortgage market.

“While the apparent growth of 56% on Q1 sounds great, it should be remembered that Q1 2013 was poorer than usual with many applications pulled into Q4 2012 to capture the tax incentive that expired at the end of 2012.

“The volumes are still less than 10% of what they were seven years ago and probably only a third of what would constitute a healthy mortgage market,” he said.

Fewer than half of the loans that were drawn down were for first-time buyers, at 49.5%, with a market share up 4.6% from the previous quarter. The share of mover purchasers fell slightly to 35.7%.

Head of residential at Savills Ireland, Graham Murray, said that one of the reasons that mortgage transaction had remained so low was due to a shortage of suitable properties on the market.

“A dearth of properties on the market, partially caused by economic conditions but also reflective of the negative equity and tracker mortgage traps that people find themselves in, and a cautious approach by mortgage lenders.

“These factors are restricting people from trading up causing a knock-on shortage of properties for those trying to buy their first home,” he said.