Almost 16,000 new mortgages, at a value of €2.7 billion, were issued in 2012, an increase in volume of 11.3 per cent on 2011.

This marks the first year-on-year increase in the number of new mortgages issued since 2006, and is a further sign that the mortgage market is gradually stabilising. However mortgage lending remains constrained, and is far off the 204,000 mortgages issued in 2006 at a value of almost €40 million.

According to a market report from the Irish Banking Federation (IBF) and PwC, first-time buyers and mover-purchasers are behind the latest increase. Together they account for about nine of every 10 new mortgages issued, while lending to first-time buyers has reached its highest level since the last quarter of 2008.

In the fourth quarter of 2012, the market was boosted as home buyers rushed to avail of mortgage interest relief, which expired at the end of the year.

More than 6,000 new mortgages to the value of almost €1 billion were issued, an increase of over 51 per cent on the previous quarter and an increase of over 56 per cent on the same period in 2011.

“The continued increase in the number of new mortgages drawn down by borrowers points to a market that is moving from stabilisation into recovery, supported as it is by a certain levelling of house prices, improved borrower sentiment and the increased availability of finance from lenders,” said Pat Farrell, chief executive of the IBF, adding that sustaining this trend will be dependent on "clear policy support for the prioritisation of secured over unsecured credit as the new personal insolvency regime unfolds and urgent action on the Dunne judgement".

When looked at by value however, the increase is less marked, with an annual increase of 7 per cent in new mortgage lending. This is reflected in a lower average first time buyer’s loan, which now stands at just over €154,000, down from €163,470 at the start of the year.