Value of mortgage drawdowns in fourth quarter at highest level in 12 years

Mortgage drawdowns in the fourth quarter of 2020 increased 6.6 per cent in value to its highest level in 12 years, but they dropped almost 1 per cent in volume compared to the same quarter the previous year, new figures from the Banking & Payments Federation Ireland (BPFI) show.

The value of drawdowns reached its highest quarterly level since the fourth quarter of 2008. The BPFI said this was driven by borrowing by first-time buyers, which rose to its highest level by volume and value since the third quarter of 2007.

Over the course of 2020, a total of 35,617 mortgages with a value of €8.36 billion were drawn down in 2020 – the lowest level of activity since 2017.

Some 43,151 mortgages with a value of €10.3 billion were approved during the year, meanwhile. This total was down 6.7 per cent on 2019 but was 2.1 per cent higher than in 2018, with the average value of approved mortgages rising 6 per cent year-on-year.

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Some 12,154 of the year’s mortgage drawdowns came in the fourth quarter, with these new loans having a combined value of €2.95 billion. This represented an uptick in activity compared to the third quarter, with volumes up 49 per cent and the value of the drawdowns almost 51 per cent higher.

First-time buyers remained the single largest segment of the mortgage market, the BPFI said, representing about 57 per cent of it by both volume and value.

Approvals trend

The industry body’s approvals report for December 2020 shows 3,999 mortgages were approved during the month. Some 2,139 of these were first-time buyer loans, while mover purchasers accounted for 997 of the approvals.

The total of approvals in December was down 23 per cent month-on-month, but rose by almost 35 per cent year-on-year.

The mortgage approvals had a value of €979 million, of which first-time buyers accounted for €518 million, with €287 million approved for mover purchasers. These values were down almost 24 per cent compared to November but were 40.5 per cent higher compared to December 2019.

"Our latest mortgage data is showing strong year-on-year growth in approvals and drawdowns in December and Q4, respectively," said Brian Hayes, chief executive of the BPFI.

“While the recovery in mortgage activity in recent months in has not fully offset the sharp decline we saw earlier in 2020 due to Covid-19 restrictions, the continued strong performance of approvals suggests that there is a good pipeline for drawdowns in the first and second quarter of this year,” he said.

“It remains to be seen however the impact the current lockdown we are experiencing will have on prospective homebuyers and the mortgage market as we move beyond that.”