Rate of decline in mortgage market slows

THE MORTGAGE market got off to a weak start this year but the rate of decline continued to slow as first-time buyer activity steadied.

Research from the Irish Banking Federation (IBF) and PricewaterhouseCoopers shows that new mortgage lending in the first three months of the year amounted to €1.2 billion, down from almost €2 billion a year earlier.

Almost 7,000 new loans were drawn down in the first quarter, compared to just shy of 11,000 in the same months of 2009 and close to 30,000 two years ago.

First-time buyers and homeowners trading up were together the dominant force in the market at the start of 2010, while investor activity all but dried up.

While still in decline, however, the rate of slowdown in the overall market is easing as the months progress, according to the IBF data. This is particularly true for first-time buyers.

A breakdown of the research shows that first-time buyers accounted for one-third, or 2,300, of the almost 7,000 new mortgages drawn down in the first three months of the year. This was a fairly steady result when compared to the same period of 2009, although the overall market has declined dramatically in the meantime.

IBF chief executive Pat Farrell described first-time buyers and those trading up as the segment “out there in the market actually buying houses”.

It was by now an “embedded trend” that first-time buyers were showing resilience, he said, adding that the bottom of the market had yet to be reached.

“We don’t appear to be quite there yet,” said Mr Farrell, suggesting many buyers were still “standing back” from the market.

Analysts at Davy were slightly more upbeat, noting yesterday that the first-time buyer market was likely to be “either at or close to the bottom for loan volumes”.

They still expect the outlook for the overall mortgage market to remain weak, however.

The IBF valued the average loan extended during the first quarter at €175,415, which was flat on the same months of 2009. For first-time buyers, the average loan was €201,516, down from €251,831.