Mortgage lending in the first quarter of this year came to more than €1 billion, up over 2.5 per cent over the same period last year, though the amount extended to house purchasers fell. Mortgage loans extended to first-time buyers dropped 8 per cent, the numbrs from the Banking and Payments Federation show.
This was more than made up for by an increase in re-mortgaging of existing properties, which totalled €78 million in the first three months of the year, up from €41 million in the same period in 2015.
There was a rush to buy properties in the first quarter of last year, driven by the then imminent introduction of the new Central Bank lending rules, so some fall-off this year was expected. The 1.7 per cent drop in mortgage loans extended for house purchases was a bit less of a decline than analysts had expected, particuarly given the sharp fall in mortgage approvals.
The key source of the drop is first-time buyers. Cash extended to this group fell from €501 million in the first quarter of last year to €462 million in the same period of 2016. Mortgage loans to people moving house rose from €382 million to €405 million.
Pick up
In a comment on the figures, Davy stockbrokers said that the decline in lending for house purchases was less than might have been predicted after a 17 per cent year-on-year decline in mortgage approvals. Davy had expected lending to pick up later in the year and is sticking with a forecast that total mortgage lending for house purchases will rise from €4.4 billion last year to €5 billion this year.
At Goodbody stockbrokers, economist Dermot O’Leary pointed out that growth in overall lending reflected an increasing loan size, as the number of mortgages drawn down fell by 3 per cent.
“ This comes as somewhat of a surprise to us given the introduction of the macro prudential rules, but may suggest that those on higher incomes (and thus an ability to take out larger mortgages) are more likely to get a mortgage at the current time. Another possibility is that more expensive homes are being transacted.”
