Recent figures from the Banking and Payments Federation Ireland (BPFI) and the Central Bank, show a surprising downward shift in mortgage rates. A slow down in switching, however, also resulted in a decline in the amount of new mortgages issued. Ireland still has one of the cheapest mortgage rates in the eurozone and an encouraging amount of loans have been issued to first-time buyers.
New mortgage drawdowns fell by a third in first quarter – BPFI
According to data from the Banking and Payments Federation Ireland (BPFI), the volume and value of new mortgages issued in the first quarter of this year decreased by around a third compared to the previous quarter.
The decline was attributed to a slowdown in switching. While re-mortgage and switching volumes and values saw year-on-year increases, they fell significantly compared to the previous quarter. However, despite the decline, the number and value of new mortgages were still higher than the same period in the previous year.
First-time buyers (FTBs) remained the largest segment of the market, accounting for over half of the volume and value of new mortgages. The growth in lending values is driven by higher housing prices.
Irish mortgage rates see surprise dip in February
According to the Central Bank, the average interest rate on new mortgages in Ireland decreased slightly to 2.92% in February. Ireland had the third cheapest mortgage rates in the eurozone.
The total volume of new mortgage agreements increased by 40% compared to the previous month and by 69% annually. Fixed-rate mortgages accounted for 93% of the new agreements, with an average interest rate of 2.83% in February.
Interest rates on household deposits were low, with overnight deposits at 0.03% and fixed deposits at 1.02% in Ireland. However, mortgage brokers noted that banks have been slow to pass on ECB rate increases to customers, and the expectation is that rates will rise in the medium term.
Decline in switching activity leads to drop in new mortgage approvals in February
New data from the Banking and Payments Federation Ireland reveals that a decline in switching activity and a busy period for fixed-rate lock-ins contributed to a decrease in new mortgage lending in February.
Mortgage approvals fell by 13.3% compared to the same month last year, with 3,378 new home loans approved. The total value of approved mortgages was €945 million, down 6.9% from January. First-time buyers accounted for a majority of the approvals. Non-purchase mortgage activity, including switching and top-ups, also saw a significant decline. The decrease in switching activity was expected following a surge in switching in recent months due to rising interest rates and the exit of Ulster Bank and KBC Bank Ireland from the market.
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