THE VALUE of the average new mortgage has fallen below €200,000 for the first time since 2005, according to a new report.

More than three-quarters of all mortgage credit issued now goes to either first-time buyers or those trading up.

According to the Irish Banking Federation (IBF)/PwC market profile for the second quarter of this year, the total value of mortgages fell by 52.2 per cent compared with the same period in 2010, down to €624 million. The number of mortgages issued also experienced a significant decline, down by 54.6 per cent to 3,551 mortgages.

Mortgage lending is now down by 95 per cent from the peak of the market in 2006.

However, there was a slight lift in the market in the second quarter compared with the first three months of the year, as the value of mortgages rose by 8.1 per cent and the number by 9 per cent, due to seasonal patterns.

“Current mortgage market activity reflects the general macroeconomic environment,” said Pat Farrell, chief executive of the IBF. “In these challenging times, manageable borrowing and prudent lending are to be expected.”

First-time buyers remain the largest segment of the market, at 42 per cent, while mover buyers accounted for 28.1 per cent.

When combined, first-time buyers and those trading up now account for 78 per cent of the market by value and 70 per cent by volume.

Residential investment remained low with a 4 per cent market share by volume and 3.3 per cent by value.

The average loan size has also fallen, down by 0.7 per cent to €175,676. The average size of a new mortgage has fallen below €200,000 for the first time since the series began in 2005, to €192,445, despite a 1 per cent increase in the average residential investment loan.

Lenders contributing to the survey reported that subdued underlying demand for new mortgage finance was driven by a range of factors. These included uncertainty around the employment situation and property price trends, together with a weakening consumer sentiment.