First-time buyers availing of State schemes accounted for 61% of mortgage transactions last year

First-time buyers availing of the Government’s two main help-to-buy schemes dominated the Irish mortgage market last year, accounting for more than 60 per cent of the transactions, a new report by the Banking and Payments Federation Ireland (BPFI) has indicated.

The banking lobby group’s latest mortgage approval figures show that first-time purchasers of property accounted for 30,550, or 61 per cent, of 50,000-plus mortgage transactions completed in the 12 months to the end of November.

This was the highest volume and value (more than €8.8 billion) of first-time buyer activity recorded since the BPFI’s series began in 2010 and comes despite a major hike in borrowing costs on the back of 10 straight interest rate increases from the European Central Bank.

BPFI chief executive Brian Hayes said the latest figures reflect “sustained upward first-time buyer trends throughout most of 2023, although we may be starting to see moderation in the growth of approvals with the year-on-year increase in volumes up by just 1.7 per cent”.

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Mr Hayes noted the values of first-time buyer approvals rose by 8.6 per cent but that this reflected higher house prices.

The BPFI’s report indicated the average first-time buyer mortgage value has now reached €294,836, some €19,000 higher than a year ago “and the second highest value recorded since our data series began”.

“Notwithstanding strong first-time buyer activity, we continue to see an overall slowdown in activity with the total number and value of mortgages approved in November 2023 having fallen by 22.7 per cent and 19.4 per cent year on year, largely driven by lower switching levels,” Mr Hayes said.

Mortgage activity in the Republic has remained strong in the past year with 50,470 mortgages valued at almost €14.4 billion approved in the 12 months to the end of November despite higher borrowing costs.

The Government’s Help to Buy scheme combined with the new First Home initiative offer first-time purchasers tax rebates and other financial supports to get on the property ladder.

Critics, however, have highlighted the inflationary consequences of these schemes.

While headline house price inflation nationally has softened to just 2 per cent in the face of higher borrowing costs, price growth in the new homes market remains more than 10 per cent, according to the Central Statistics Office.

The BPFI’s report indicated a total of 4,202 mortgages were approved in November of which first-time buyers were approved for 2,575 while mover purchasers accounted for 959.

The number of mortgages approved fell by 1.7 per cent month on month and was down by 22.7 per cent compared with the same period last year. Mortgages approved in November were valued at €1.2 billion – of which FTBs accounted for €759 million (62.9 per cent) and mover purchasers for €317 million (26.2 per cent).

Re-mortgage/switching activity fell by 75 per cent in volume terms year on year and by 77.6 per cent in value in the same period.

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