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News : Property Last Updated: Aug 27, 2014 - 10:38 PM

Irish home mortgage loans issued in Q2 2014 at annual rate rose to 1974 level
By Michael Hennigan, Finfacts founder and editor
Aug 12, 2014 - 1:11 PM

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A total of 4,803 Irish home mortgage loans were drawn down in Q2 2014 according to the Irish Banking Federation. In the period July 2013- June 2014 the number of  loans issued was at 18,016 just short of the total of 18,313 in 1974.

At 50.8% First Time Buyers remained the largest segment followed by Mover-Purchasers at 35.6%.

The IBF said that the number of mortgages drawn in Q2 2014 rose by 48.7% compared to the same quarter in 2013 (year-on-year) and by 40.2% compared to Q1 2014 (quarter-on-quarter).

The value of mortgages drawn down in Q2 2014 was €820 million. First Time Buyers accounted for 48.3% and Mover Purchasers for 43.7% of this total, meaning that 92% of mortgage credit was taken out by house purchasers.

The value of mortgages drawn in Q2 2014 rose by 58.4% compared to the same quarter in 2013 (year-on-year) and by 44.3% compared to Q1 2014 (quarter-on-quarter).

Latest report:  IBF PwC Mortgage Market Profile Q2 2014

Eamonn Hughes and Colm Foley of Goodbody commented: "Strong underlying growth continues in Q2 after very strong Q1
The Irish Banking Federation has just published its latest mortgage drawdown statistics for Q2 2014. The statistics reveal rapid growth in the number of mortgages drawn down – volume growth of 49% yoy, with the value of drawdowns up 58% to €820m. This follows growth rates of 66% and 72% yoy respectively in Q1, a quarter that was flattered by the weakness in Q1 2013 caused by the ending of the mortgage interest relief at the end of 2012. The continuation of the strong momentum into Q2 is indicative that the recovery in the mortgage market is taking hold, albeit from a low base.

FTBs and Movers make up bulk of activity
First-time buyers continued to account for the majority (51%) of activity in the second quarter of the year (same as in Q1). The volume of mortgages issued to FTBs grew by 53% yoy (+87% yoy in Q1). Similar trends were evident for mover-purchasers (up 48% yoy, after +57% in Q1). Together these two categories accounted for 86% of the loans drawn down in the second quarter of the year (unchanged from Q1).

Growth in investors from a very low base
Although the investor mortgages drawn down remains at very depressed levels, there have been some signs of recovery over recent quarters. In Q2, investor mortgage drawdowns grew by 79% yoy (similar rates to the +74% yoy in Q1). While the lending conditions continue to be tighter for these types of purchasers, further growth is likely over the coming quarters.

Little sign of loosening standards as yet
The average loan size grew by 6.5% in Q2, slightly less than the 11% yoy house price growth achieved in the quarter though accelerating from the +4% yoy growth rate recorded in Q1. Price growth should lead to some loosening of lending standards at the banks, though we have not seen any material signs thus far; the most recent Bank Lending Survey from the Central Bank in July reveals that while mortgage demand has increased since Q1 2013, lending standards remain unchanged, having tightened considerably over the crisis period.

Gross lending of €3.75bn now expected
We were previously anticipating total gross mortgage lending growth of 35% in 2014, but these numbers are ahead of our expectations. As a result, we are now forecasting loan growth of 50% in value terms, bringing the total market to €3.75bn for the year. While this will be the largest amount of mortgage lending since 2010, we believe this is just half of a “normal” level of lending."

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