Mortgage activity slows but lending to FTB remains robust
The volume of new mortgages drawn down by first-time buyers in the second three months of the year fell for the first time since the pandemic in 2020.
However, first-time buyers remained the single biggest segment of the market by both volume and value, accounting for 63%.
According to new data from the Banking and Payments Federation Ireland, the overall volume of new mortgages drawn down fell by 17.4% year on year.
While the decline reflects much lower levels of switching, which is down 63.8% compared to the same time last year, FTB mortgage volumes fell by 0.4% for the same period.
Brian Hayes, Chief Executive, BPFI said the latest mortgage drawdowns report shows that demand in the market remains strong with 9,896 new mortgages to the value of almost €2.8 billion drawn down by borrowers during the second quarter of 2023.
FTBs remained the largest segment, making up about 63% of both approval and drawdown volumes in April, May and June.
They accounted for almost 82% of home mortgage drawdowns on new properties and 70% of secondhand properties, the highest shares since the data series began.
“We also see that the value of FTB drawdowns increased by 7.6% to almost €1.7 billion, the highest Q2 level since 2007,” Mr Hayes said.
“Much of the increase reflects upward trends in average mortgage values, with the average FTB drawdown value reaching €284,397 in Q2 2023, the highest level since the data series began in 2003,. The average FTB and mover purchase mortgages on new properties both reached their highest levels since the data series began in 2005 at €325,223 and €353,657.”
Mr Hayes said that looking at the latest mortgage approval figures for June, we can see approval volumes fell in year-on-year terms for the fifth successive month, mainly reflecting the decline in switching activity.
“However, similar to what we’re seeing in drawdown figures, FTBs continued to buck the trend with 3,013 FTB mortgage approvals valued at more than €862m in June 2023, the second highest levels (after May 2023) since the data series began in 2011,” he added.
The BPFI CEO said it is too early to say if FTB volume growth will return in Q3 but there were 8,600 FTB approvals valued at almost €2.5 billion in Q2 2023, so there is a strong pipeline for drawdowns later in the year.