Mortgage approvals surged 62 per cent in the first quarter of 2017 compared to the same period last year, according to figures released Thursday by Banking & Payments Federation Ireland (BPFI).
And the value of the loans approved is rising even faster – by 77.5 per cent year on year.
However, the number of loans actually drawn down to close home purchases in the same period was just 27.4 per cent up year on year.
The gap between approvals and draw downs illustrates the pressure in the housing market with significantly more money approved for home purchase than has been actually spent in the period.
The figures were published just a day after Central Bank governor Philip Lane rejected suggestions that the economy is on the brink of another housing bubble.
He said the bank’s mortgage-lending rules will ultimately act as a drag on property prices despite CSO’s latest numbers which suggest property price inflation is back in double-digit territory after nearly two years of moderate growth.
Davy economist Conall Mac Coille said property price rises had been a factor in the numbers, with the average mortgage loan now standing at €208,000, up 9 per cent on the year.
“However, rising mortgage lending volumes account for most of the expansion,” he said. He added that figures for the month of March alone showed approvals of loans of €783 million, more than double the amount in the same month last year, suggesting that the expansion in mortgage lending would continue through 2017.
BPFI, which represents Ireland mortgage lenders, said there was a “notable and significant increase” in first-time buyer activity in the period, with higher volume and value in the three months to March 2017 than at any point in the past two years.
The value of mortgage approvals to the first-time buyers surged 93.1 per cent in the three-month period compared to 2016 while there was a 60.4 per cent rise in the value of loan to people moving from their existing homes.
The new data show 6,939 mortgages were drawn down by borrowers during what is traditionally the weakest quarter of the year, with an aggregate value of €1.39 billion .
This is up by just over 27 per cent in terms of volume and by 39.5 per cent in value versus the corresponding quarter in 2016.
First-time buyers remain the single largest segment both in terms of volume and value, accounting for almost half of all mortgages drawn down.
Together, first-time buyers and mover-purchasers accounted for 85.7 per cent of the total value of mortgages drawn down. The balance comprises buy to let mortgages (3 per cent), mortgage top-ups (2.9 per cent) and remortgaging (8.6 per cent. Following publication of the latest figures, Davy issued a revised forecast for the Irish mortgage market. It said it expects mortgage lending for house purchase to top €6.4 billion this year, versus a previous forecast of €6billion.
Total mortgage lending, which includes re-mortgages and top-ups, will likely reach €7.5 billion, up from a previously forecast €6.9 billion estimate.
