IBF mortgage figures highlight downturn in property market

The number of residential mortgages issued last year fell by 22.5 per cent compared with 2006, while the value of those loans declined by 15 per cent to €33.8 billion, according to figures published yesterday by the Irish Banking Federation (IBF).

The IBF statistics show that 158,098 mortgages were drawn down in 2007 compared with 203,953 in the previous year.

This is yet another indication of the sharp slowdown in the Irish property market.

The IBF said €140 billion worth of home loans were outstanding at the end of 2007.

In the period from October to December last year, 37,719 new home loans were issued with a combined value of €8.3 billion.

This compared with 48,637 mortgages drawn down in the same quarter of 2006 with a combined value of €10.3 billion.

The decline in the market is even more stark when statistics for the fourth quarter of last year are compared with the same period of 2005.

Financial institutions issued 55,618 home loans between October and December 2005.

In the intervening two years, this figure has declined by 32 per cent.

Pat Farrell, the IBF's chief executive, acknowledged the slowdown in loan growth. "The reduction in demand has been clear for some months now," he said. "Buyers have been standing back from the market in the expectation of a reduction in prices."

Mr Farrell said it was difficult to predict the outlook for 2008 but added that there were some tentative signs of a recovery.

"There is evidence that buyers are coming back into the market . . . and evidence that affordability is improving. It's a sentiment issue, but there are signs that it is beginning to turn."

The IBF's analysis shows that first-time buyers increased their share of new lending, rising to 19.3 per cent in 2007 from 18.2 per cent the previous year.

The remortgage or switching segment accounted for 16.4 per cent of new loans last year compared with 13 per cent in 2006.

Mortgage top-ups continue to take the biggest slice of new lending, with about 48,000 of these loans issued in 2007. Residential investment letting maintained its share of the market at 19.4 per cent.

The average loan drawn down by first-time buyers in the fourth quarter of last year was €243,232. This was down on the average loan of €248,068 in the previous quarter, but ahead of the average mortgage of €240,151 in the same three-month period of 2006.