Irish borrowers drew down €14.1 billion in home loans last year, the highest figure since the post-2008 financial crisis, new figures from the Banking and Payment Federation of Ireland (BPFI) have revealed.
In a report published on Wednesday, the banking lobby group said that some 52,634 mortgages were drawn down in 2022, up 21 per cent from 2021 in terms of volumes. At €14.1 billion the value of mortgage drawdowns was 34.3 per cent higher last year than the previous year, the BPFI said.
First-time buyers remained “the single largest segment”, the report noted, representing 46.8 per cent of the total number of drawdowns in the three months to the end of December last, and also 46.2 per cent of the total value.
Separately, the BPFI said lenders approved 58,276 mortgages in 2022, an increase of 9.3 per cent from 2021 while the value of mortgages approved jumped 17.9 per cent to €15.9 million.
Commenting on the figures, BPFI chief executive Brian Hayes said: “Our latest mortgage data, which provides an annual picture for 2022, shows significant numbers of both drawdowns and approvals, and a particularly strong year for first-time buyers.”
Looking ahead, he said: “We expect housing and mortgage demand to remain strong despite the challenging economic environment. Almost 108,000 first-time buyer loans have been drawn down in the past five years, and lenders will continue to support customers as they seek to buy or build a home.”
The increase in approvals last year occurred despite a December slump in the number and value of new mortgages approved. Some 3,635 home loans were approved in the month, almost half of which were for first-time buyers. The December total represented a 33.1 per cent decrease in the volume of approvals from November and a 5.7 per cent decrease year-on-year.
However, on an annualised basis Mr Hayes said approval volumes “reached 58,276 in 2022, up 9.3 per cent on 2021, largely driven by the growth in people switching mortgage providers – known as per cent approvals – as Ulster Bank and KBC leave Ireland. The value of approvals jumped by 17.9 per cent to €15.9 billion. These are the highest levels recorded since the data series began in 2011.”
The data indicates that mortgage demand remains robust despite the sharp increase in interest rates over the past year.
Central Bank data published in January indicated that despite rising borrowing costs, domestic banks trailed overseas peers in passing on European Central Bank (ECB) rate hikes and households scoured the market for the best deals.
The figures showed that the weighted average new Irish home loans rate was 2.57 per cent in November, unchanged from the previous month but 0.14 of a point lower than a year earlier.
By contrast, the average rate in the euro zone was 2.84 per cent, up 0.19 points on the month and 1.54 points compared to November 2021, the bank said. The Republic had the third cheapest new rates in the single currency region, behind France and Malta.
“I don’t think anyone had in their forecasts that Ireland was going to have among the cheapest mortgage rates in the euro zone,” said Daragh Cassidy, a spokesman for consumer price comparison website Bonkers.ie told The Irish Times last month.
However, he said that it is unlikely to be the case for much longer given that the ECB is expected to raise rates by a further 0.5 percentage points when its governing council meets on Thursday.