Demand for mortgages ‘not met’

A “major intervention” has been called for to address the mortgage crisis, despite new figures showing increases in approval levels.

According to the Irish Banking Federation (IBF), 1,673 mortgages, to the value of €281m, were approved during September — over 90% of which were for house purchases. The approval figure represented a year-on-year increase of just over 10%; although the rate was down nearly 6% on a monthly basis. The IBF added that the value of mortgage approvals grew by 5.8%, year-on-year, during September, but fell by 5.5% on a month-by-month measure.

However, leading representative body, the Professional Insurance Brokers Association (PIBA) was quick to warn that little has changed for the better, five years on from the start of the financial crisis.

“There is no doubt whatsoever now that there is an unmet demand for mortgages. And regardless of the number of approvals banks are indicating they are giving, the reality of the situation is they are not materialising into loans to consumers,” PIBA’s chief operations officer Rachel Doyle said.

“Unless there is a major intervention and the banking crisis gets sorted out in the foreseeable future, it will continue to be a major drag on the hopes and plans of individuals and families but will also stymie recovery in the wider economy,” she added.

Elsewhere, latest money and banking stats from the Central Bank show a continued fall in overall lending levels — to Irish households — in September. Total lending fell 4.2% on a year-on-year basis, following on from a 4.3% annualised fall in August.

Once again, the latest fall was driven by house purchase loans, which declined at an annual rate of 2.4% in September. Lending for consumption and other purposes — which accounted for 23% of all household lending in the month — was down by 9.8%.

The latest Central Bank data also details how household loan drawdowns exceeded repayments during September; only the third time this has occurred since the end of 2009.

Yesterday’s update also shows that lenders’ reliance on Central Bank borrowings fell by €700m during the month, bringing reliance on such funding to its lowest level — €42.6bn — since August 2008.


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