THE SLUMP in mortgage lending may have reached the bottom, according to a survey of mortgage brokers due to be published today.

The survey found that seven out of 10 mortgage brokers had seen business fall off in the past three months while 25 per cent said demand for homeloans had increased.

The report, backed by KBC Ireland and the Independent Mortgage Advisers Federation (Imaf), notes that while the figures show a further drop they also indicate that a “bottoming-out process may be beginning”.

First-time buyers were responsible for most of the loans, which the survey says reflects the fact that those who are buying homes need to do so. Falling property prices and interest rates may also have combined to make buying a home cheaper than renting.

The study says job security is a key issue, particularly for the banks, which are concerned about borrowers’ ability to repay their mortgages. While the survey suggests such factors hit prospective buyers’ ability to get a mortgage, it adds that credit availability has not been critical to determining activity in the homeloan market.

Imaf president Gerry Kinahan said the report showed that the mortgage market continued to weaken over the past three months. “However, there are also signs that an element of stability is coming into the market and some brokers are reporting a tentative improvement,” he said. “While there is no sense that a significant turnaround is at hand, signs of greater stability in the mortgage market must be regarded as encouraging.”

KBC Ireland chief economist Austin Hughes noted that the survey implied house prices had fallen further than thought.

“On the basis of the transactions they are seeing, mortgage brokers think Irish house prices have fallen about 35 per cent since the peak,” he said.