Mortgage drawdown values are slowly climbing as they reached almost €10.5bn in 2021, the highest they have been since 2008 when the market was worth €23bn.
Some 53,335 mortgages to the value of €13.4bn were approved in 2021, of which 43,494 mortgages to a value of €10.5bn were drawn down, new figures show.
The data from a Banking & Payments Federation Ireland (BPFI) report show the 2021 figures were the highest value of mortgage drawdowns in Ireland since 2008 and the highest volume since 2009. Drawdown volumes rose by 22.1%, while values rose by 25.1%.
“In 2011, the market fell to €2.46bn. So there has been a significant recovery since then,” said economist Jim Power.
“The availability of credit is improving, albeit at a very low level,” he added.
“Clearly, mortgage availability is gradually getting better. But I would estimate that to satisfy the demand for housing at the moment the market should be at around €15bn."
However, there aren’t enough houses to satisfy a market of €15bn at the moment, states Power. He said there will need to be 40,000 new houses on the market every year for the next few years.
“It’s unlikely we are going to reach that target,” said Power.
In the background to this increasing level of mortgage drawdowns is the rising cost of house prices across the country. Central Statistics Office figures show residential property prices increased by 14% nationally in the 12 months leading up to November 2021, representing the 13th month of growth in succession.
In addition, regional house prices are rising at a faster rate than in the capital, according to CSO data. Outside the capital, the highest median house prices were in Wicklow at €385,000 and Kildare at €335,000. The lowest price was €129,000 in Longford.
Although house prices are rising, Power does not believe Ireland has a borrowing issue right now.
“I am not remotely worried there is anything like excessive lending taking place at the moment. And in fact the Central Bank's mortgage lending rules are ensuring people aren’t borrowing too much. That’s putting a lid on the market,” said Power.
In the last quarter of 2021, first-time buyers accounted for more than half of the 13,299 new mortgages to the value of €3,312m drawn down by borrowers. First-time buyer mortgage drawdown volumes increased by 5.2% year-on-year to 7,240 while mover purchase drawdown volumes increased by 3.3% year-on-year to 3,131 in the fourth quarter of December 2021.
“Looking to the year ahead we anticipate a strong pipeline of mortgage approvals,” said BPFI chief executive Brian Hayes.
“With an increase in housing supply also projected we expect all these factors combined to lead to strong activity in the housing and mortgage markets during 2022,” he added.