RIL relates to investment property

Irish mortgage lending fell 20 per cent in the first quarter as the housing contraction intensified.

New loans to homebuyers fell to €6.3 billion from €7.8 billion a year earlier, according to an Irish Banking Federation today. The number of loans fell by 25 per cent to 28,508.

In response to high Euribor inter-bank rates, Irish banks have raised lending rate sin recent months and tightened lending standards.

The following are among the key features of the first quarter data:  

• The share of the total market held by first-time buyers (FTB) and by mover purchasers is down by volume compared with the previous quarter, while that accounted for by investors (RIL purchase) recorded a slight increase.
• The level of switching activity (re-mortgage) continues to grow.  With a 26.2% share of the market by value, switching is now the largest market segment - having increased its market share by 12 percentage points over the past two years.
• The total value of lending in Q1 2008 is comparable with the same period in 2005.

Commenting on the data, IBF Chief Executive, Pat Farrell, stated: “Conditions in the mortgage market remain challenging.  On the supply side, credit availability has tightened.  On the demand side, there is a strong demographic cohort of potential house buyers but many of these appear to be holding off for the moment in anticipation of further house price reductions.  At the same time, the switching market has continued to perform strongly.”

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