Mortgage market 10% of peak levels

THE mortgage market is just 10% of what it was at the peak of the housing boom, with brokers reporting very little activity.

Director of the Irish Mortgage Corporation, Frank Conway said mortgage rejection levels will continue to be “pretty high” for the foreseeable future.

This news comes as almost half of brokers surveyed by the Professional Insurance Brokers Association (PIBA) found that lenders turned down between 60% and 80% of mortgage applications in the first three months of this year.

“In terms of where the market is currently, its really a bit of a dead duck at the moment. Mortgages have become like the Loch Ness Monster. We hear about them but its hard to prove they are there. Perhaps that’s a bit rough but mortgage transactions really are difficult to come by these days,” said Mr Conway.

He said until the arrears and bank liquidity problems, as well as the merger of the banks are all complete, there will be no movement in the mortgage market.

“In addition, property prices are continuing to be the big unknown, lots of vested interests are clamouring to say that we have reached bottom but nobody knows. On top of that the jobs market is still a mess.

“So, our very own troika: jobs, mortgages and property prices are in such a state of extreme flux that nothing will happen until all of those begin to settle down,” he said.

Many first-time buyers are trying to take advantage of low house prices and potential buyers are also anxious to buy before interest rates go higher. However, concerns about securing a loan and the future health of the economy are proving deterrents to purchases.

Director of PIBA mortgage services, Rachel Doyle, said the absence of a normal functioning banking system is continuing to stymie any underlying demand.

“Brokers are reporting that this, along with the related concerns about the IMF/ECB bailout, is depressing consumer sentiment,” she said.

Job security is one of the main reasons mortgage applications are being refused by lenders. Either the applicant has not been in employment for sufficient time or their employment is a fixed contract rather than permanent, according to the PIBA.

Latest figures from the Irish Banking Federation (IBF) show that 5,624 new mortgages worth €982 million were issued during the fourth quarter of 2010 — a fall of 43.5% on the same period in 2009.

IBF chief executive, Pat Farrell said that against a “very challenging” economic background it can come as little surprise that mortgage market activity remains weak.


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