One of the surprising fallouts of Covid-19 here has been its impact on the property market, in terms both of values and of buyer interest. Prices have largely held firm, with lack of supply a major factor. Then, in November and December, Banking & Payments Federation Ireland reported record mortgage approvals: November figures were up 24 per cent on the same period in 2019, with first-time buyers the most active segment, accounting for 54 per cent of new loans approved that month.
The unexpected surge in potential house buyers has been variously put down to young renters returning to family homes during lockdown and so accumulating rent-free savings for deposits; a shift away from unaffordable city rents towards more affordable regional homes; and boosted savings among people whose incomes have been unaffected during the pandemic but have limited places to spend their cash during lockdown.
But whether the surge in first-time-buyer mortgage applications and approvals accurately reflects real buyer intent is a moot point. One source at a major mortgage lender this week says that although the increase in first-time-buyer interest is to be welcomed, it may not necessarily reflect an immediate demand for houses. “We’re seeing a huge increase in mortgage applications, but, based on actual follow-through with all the required documents, a portion of these may just be using time on their hands at home to simply test the water.”
So it seems they’re just trying to establish what their budgets might be rather than having immediate plans to buy.
Similarly, because major lenders have made the preliminary mortgage-application process relatively straightforward, once you’ve compiled all the documents you need – bank statements, salary slips, rent records and so on – you can easily apply to two or three banks. As buyers can go ahead with only one mortgage, this creates an obvious shortfall between approvals and draw-downs.
It’s a reminder that mortgage approvals don’t always translate into sales – one worth taking into account amid constant calls for measures to increase the availability of houses.
