Mortgage approvals jump 17.6% in year to July

It may still be summer, but that isn’t stopping putative home buyers seeking mortgage approvals, new figures from the Banking & Payments Federation Ireland (BPFI) show.

In the year to July 2016, mortgage approvals jumped by 17.6 per cent to 3,274, while the value of mortgages approved rose by 28.5 per cent to €659 million. This was the most mortgage approvals since the series began in January 2011.

There was strong growth first-time buyers (FTB) seeking approval (+14.7 per cent) and they now account for 48.7 per cent of the total market.

Those trading up reported a similar growth in approvals, and they account for about a third of the mortgage market. While switchers are still a relatively small component of the market (7.5 per cent), approvals for those looking to change mortgage soared by 90 per cent in the year to July, albeit above a low base, with just 245 approvals in total during the year.

The figures point to an uptick in mortgage activity since May 2016, after a slow start. Year-to-date (January to July), based on the three-month moving average, shows that activity has changed little since 2015, with volumes down 2.6 per cent year-on-year and values up 1.2 per cent, reflecting the increase in the average FTB mortgage approval value.

However Philip O'Sullivan, economist with Investec, is targeting total mortgage drawdowns of €5.5 billion for 2016, up by 10 per cent on 2015, and says that, based on first half drawdowns (€2.3 billion) and the aforementioned approvals data, "this target looks achievable".

Mortgage competition

Competition in the mortgage market continues to heat up, with Bank of Ireland announcing on Monday that it is to give home buyers or switchers up to 3 per cent back on the value of their mortgage, if they also have a current account with the bank. This is more than the 2 per cent offered by both Permanent TSB and EBS, although homeowners should also consider the impact of interest rates when making a mortgage decision.