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News : Property Last Updated: Jan 9, 2013 - 11:22 AM

Irish Economy: Mortgage approvals rose in November 2012; 12-month total at 1972 level
By Finfacts Team
Jan 9, 2013 - 11:16 AM

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

Irish Economy: The level of mortgage approvals continues to increase as confirmed by the second monthly report in the new IBF data series which tracks the number of new mortgages approved by mainstream lenders. The IBF (Irish Bankers' Federation) Mortgage Approvals Report shows that a total of 2,010 mortgages were approved by lenders during November 2012 to the value of €346m.  This represents a volume increase of 25% and a value increase of 23.9% compared with the same month in 2011; it also represents a volume increase of 8.6% on a monthly basis  -- monthly and annual changes are calculated based on changes in the three-month moving average. The 12-month total is at the 1972 level  - - a 40-year low.

The vast majority (94%) of the 2,010 mortgage approvals was for property purchase, which itself showed a year-on-year increase of 35.4%; the balance of approvals was for re-mortgages and top ups.

Data collection for the IBF Mortgage Approvals Report began in August 2012 covering the period from January 2011 onwards in respect of the market’s main mortgage lenders.

Commenting on the data, IBF’s director of public affairs, Felix O’Regan, said: “The second month of data in this new series confirms continued growth in the number of new mortgages approved by mainstream lenders. As the IBF Mortgage Approvals Report is a lead indicator of future mortgage market activity, we expect this trend to be reflected in the mortgage drawdown figures for Q4 2012 when the IBF/PwC Mortgage Market Profile is published next month.  This evidence of renewed mortgage market activity is welcome.  Approvals data for December and the following months will enable us to establish a clearer picture of the trend.”

The approvals in the period December 2011-November 2012 amounted to about 17,400. In the 1972 calendar year, the total approvals amounted to 19,188.

Dermot O'Leary, chief economist at Goodbody, comments: "While the headlines from Fitch’s latest report on the housing market read negatively, the evidence on the housing market over recent months points to the contrary. This is further backed up by the latest set of statistics released this morning by the Irish Banking Federation. It states that mortgage approvals trends continued to improve at the end of 2012, with approvals for house purchase in the month of November alone up 49% yoy.

This takes the growth rate in the three months to November to 35% yoy, up from 23% yoy in the three months to October.

It must be remembered that this data refers to approvals rather than drawdowns, but the trends in the two follow each other quite closely. The latest approvals data for Q3 show gross lending up 20% yoy for house purchases. This should improve into Q4 2012 and Q1 2013. It is worth making the point that these figures are undoubtedly affected by the end of Mortgage Interest Relief (MIR) at the end of 2012, and we are likely to see this momentum on approvals slow at the beginning of this year.

Nevertheless, there are broader signs that some stability has returned to the market in the urban centres in particular following a record fall over the previous five years. These data support that view."

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