Mortgage switching collapses with approvals down 54% in March

Remortgaging and mortgage switching activity fell 54.4 per cent year-on-year in March, pointing to a slowdown in that market as interest rates rose, according to Banking & Payments Federation Ireland (BPFI).

The drop in volume was almost matched by a 53.1 per cent fall in the value of remortgage and switching activity last month compared to March 2022.

“Our latest mortgage figures show that in terms of mortgage drawdowns, demand remains strong with 10,908 new mortgages to the value of €2.9 billion drawn down by borrowers during the first quarter of 2023,” said BPFI chief executive Brian Hayes. “However, overall, the figures point to a continued year-on-year slowdown as the impetus from switching decreases.”

New borrowing

Mortgage approval volumes in March fell by 1.2 per cent year-on-year, though they were up 33.8 per cent compared to February.

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The industry body’s loan approvals data shows some 4,520 mortgages were approved in March. Of these, 2,801 — or 62 per cent — were for first-time buyers, which was the highest share for first-time buyers since the data was first published first became available in July 2014.

Mortgages approved in March 2023 were valued at €1,301 million, of which first-time buyers accounted for €819 million and mover-purchasers for €332 million. The value of loan approvals rose by 37.7 per cent month-on-month and 7.7 per cent year-on-year.

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Separate mortgage drawdown figures on how much was actually drawn down by mortgage applicants rather than simply approved show new borrowing increased 10.1 per cent in volume and by 14.1 per cent in value in the first quarter compared to the same period last year.

Some 10,908 new mortgages to the value of €2.87 billion were drawn down in the first three months of 2023, the BPFI said. This was down 31.1 per cent in volume and 34.1 per cent in value compared to the fourth quarter of 2022.

Drawdowns report

First-time buyers remained the single largest segment of the mortgage market, accounting for 50.8 per cent by volume and 51.1 per cent by value.

Remortgage and switching rose 22.5 per cent by volume and 25.3 per cent by value year-on-year, but fell 52.1 per cent and 53.7 per cent on the previous quarter, according to the BPFI drawdowns report.

Mr Hayes said trends in the homebuyer segments of the market remained positive, with first-time buyer and mover-purchaser drawdown volumes reaching their highest first-quarter levels since 2007 and 2008 respectively.

“We can also see that lending values continue to grow, driven by higher housing prices. At more than €292,000, the average first-time buyer approval in March was the highest since detailed approval data became available in July 2014,” he said.