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News : Irish Economy Last Updated: May 21, 2012 - 7:25 AM


Irish Economy 2012: Home mortgage approvals in first quarter 2012 sink to levels not seen since 1960s
By Finfacts Team
May 19, 2012 - 5:27 AM

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New houses: red; Second-hand houses: blue - - Source: Department of the Environment, Community & Local Government 

Irish Economy 2012: The IBF/PwC Mortgage Market Profile report published Friday, shows that 2,630 new mortgages to the value of €450m were issued during the first quarter of 2012. The current series of official statistics are from 1970 and the annualised quarterly performance in 2012 is 16% below the level in 1970 - -  back possibly 45 years into the 1960s.

While the volume of new lending is down 19.3% in Q1 2012 compared to Q1 2011, this is the lowest rate of year-on-year decline since the first quarter of 2007. The data also shows that new lending in Q1 2012 is down 31.8% on the previous quarter. While the seasonal pattern of mortgage lending typically results in a lower level of lending in the first quarter of the year compared to other quarters, this reduction in activity also reflects the broader macroeconomic environment.

The report says that the key home purchaser segments of the market, First Time Buyers and Mover Purchasers, continue to dominate this smaller market. Together they now account for nearly 80% (79.2%) of new mortgages issued. Or put another way, over 84% of all mortgage credit now goes to the home formation segments of the market.

The average loan size rose to €171,244 (up 3.4%) in Q1 2012.

The average first time buyer mortgage was €164,000 in the quarter compared with €212,000 in Q1 2006 and €252,000 in Q1 2008. The average mover mortgage was €208,000 compared with €225,000 and €282,000.

Commenting on the latest data, Pat Farrell, IBF chief executive, said: “We have consistently pointed to the need for close examination of activity over a series of quarters before calling any sign of recovery in the mortgage market. In this regard the reduction in Q1 activity reflecting traditional seasonal factors - while following as it does three successive quarters of growth - cautions against any definitive view on market direction at this juncture. However, it is interesting to note that, at 4.7%, the year-on-year reduction in activity in the all-important home purchaser segments of the market is considerably less than the 19.3% reduction in overall market activity.”

Official data shows that home loan approvals amounted to 12,500 in 1970 and 114,600 in 2006 -- the peak year of the housing bubble.

IBF/PwC Mortgage Market Profile Q1 2012

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