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Ireland

Irish mortgage approvals in 2014 rise but are at 40-year low

05/08/2014

The Irish Banking Federation has published the latest figures from the IBF Mortgage Approvals Report for the three months ending June 2014 and in the first half of 2014 the level of 10,746 approvals was 36.6% up on the same period in 2013 - -  but on an annualised basis, the total is at the lowest since 1974 when Irish mortgage approval numbers were at 20,800, 40-years ago.

In 1971 Census of Population data show that the population was two-thirds the current level of 4.6m.

Usually the number of mortgage payments is below the approvals level.

The following are the key elements of the IBF report:

  • A total of 2,268 mortgages were approved per month, on average, in the three months ending June 2014, of which 2,102 (93%) were for house purchase;
  • The number of mortgages approved rose by 41.5% year-on-year and by 11.2% month-on-month;
  • The value of mortgages approved per month, on average, in the three months ending June 2014 was €406m, of which €390m (96%) was for house purchase;
  • The value of mortgage approvals increased by 49.3% year-on-year and by 13.4% month-on-month.

Dermot O'Leary, chief economist at Goodbody, commented:

"Another strong quarter for mortgage approvals…
There was continued momentum in the mortgage market in June, according to the latest data from the Irish Banking Federation this morning. In June, the number of mortgage approvals increased by 48% yoy, with the value of approvals up by 57% yoy. In Q2, the number approvals grew by 41% yoy (+52% yoy in Q1) with the value of these approvals ahead by 49% (+56% yoy). While this represents a slowdown in the rate of growth from Q1, this was to be expected due to weak base effects in Q1 2013. In volume and value terms, mortgage approvals in Q2 were at their highest level since the series began in January 2011.

Gross lending of 30%+ achievable in 2014
A gap still exists between approvals and drawdowns, but results from Bank of Ireland and AIB last week indicated that there has been a large increase in gross mortgage lending in the first half of the year (market data will be published next week). AIB stated that gross mortgage lending increased by 34% yoy in H2, while Bank of Ireland, reported growth of over 40% yoy. The strong trend in approvals in Q2 suggests that mortgage lending will also grow strongly in H2. Gross mortgage lending amounted to €2.5bn in 2013, well short of what we believe to be a “normal” level of c.€8bn. We expect growth of over 30% this year, which will go some way towards returning new lending to these normal levels."

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