THERE IS no case for the Government to intervene in the mortgage market, the Irish Banking Federation (IBF) has said, despite figures confirming that the value of new mortgages fell 13 per cent in the three months to the end of June.
Pat Farrell, chief executive of the IBF, said higher interest rates, tighter lending criteria, weaker sentiment and the economic downturn had led to a year-on-year drop in mortgage lending. However, he said the Government did not need to act to re-invigorate the market. "It doesn't add up to a case at this point for any interventions in the market. The market is continuing to adjust," he said.
Mortgages drawn down continued to lag the number approved in the second quarter, showing that prospective buyers were still delaying their purchases.
The value of new mortgages declined to €7.5 billion in the second quarter from €8.7 billion a year earlier, according to the latest mortgage report by the IBF and PricewaterhouseCoopers.
The first-time buyer market was down 19.2 per cent in value terms on the same period last year and had fallen 28 per cent for the first six months of 2008 on last year.
Mortgage lending increased 20.7 per cent in value terms on the first three months, though the start of the year is traditionally a quiet time for new borrowing.
"Current trends can be attributed to a range of factors including consumer expectations of further house price reductions, the uncertain outlook on the economic and interest rate fronts, as well as the increased cost of funding for lenders," said Mr Farrell.
The switcher segment of the market was the only sector to increase in value year-on-year, while the average loan size fell in the first-time buyer, trading-up borrower and switching sectors.
The average loan size in the buy-to-let sector increased and has the highest average loan size.
The Bank for International Settlements said yesterday that sales of mortgage-backed securities surged to $188 billion (€128 billion) in the second quarter from $52 billion in the first quarter, with the UK leading the increase, followed by Belgium and Ireland.
According to the latest monthly statistics from the Central Bank, the value of asset-backed securities issued by Irish lenders rose to €20.6 billion in the second quarter from €6.8 billion a year earlier.
