There will be much debate as to whether the phasing out of tax relief on mortgage interest for first time buyers at the end of 2012 had a significant impact on the Irish residential property market, and perhaps next week when the CSO publishes its property price indices for January 2013, we will have more a steer on what is happening. But this morning, in statistics released by the Irish Banking Federation, there is no doubt that there was a rebound in mortgage lending in the three months ending 31st December 2012.
The Irish Banking Federation says it represents lenders which together comprise more than 95% of the Irish mortgage market, and its series of statistics are the most detailed provided at a level where you can distinguish first time buyers, movers and buy to let activity as well as remortgages and top-ups.
In summary, mortgage lending in Q4,2012 is up just over 50% by volume and value compared with Q3,2012 and up just over 56% on Q4,2011. Volume and overall value of lending is still down from the peak, generally in 2006, by 90%. So although there has been a rebound, it is from very low levels of lending.
The IBF publishes volume, value and average value statistics which are reproduced below together with the comparisons at the top of each table from here.
Overall in 2012, mortgage lending was €2,636m which is up slightly from the record low €2,463m recorded in 2011 and is down from the record high €39,872m recorded in 2006.
First time buyer activity is particularly strongly up on the previous quarter and year. This can be interpreted in a number of ways, from there being increased confidence in the Irish residential property market and that the risk of future declines is limited, to the phasing out of tax relief on first time buyer mortgages at 31st December 2012. Speaking to estate agents, I tend to plump for the latter explanation, but in the second half of 2012, property prices did show some evidence of stabilization so you can’t rule out the former explanation. However property prices declines by over 1% in December 2012, wiping out much of the previous gains, and we will have to wait until next week to see how prices performed in January 2013.
@ NWL Edel Morgan had a short piece in the Irish Times on 7/2 about January transactions from the property register, which does seem to suggest a serious post tax relief slow down. I am sure it will be a few more months before any trend is clear. http://www.irishtimes.com/blogs/home-truths/2013/02/07/property-price-register-tells-a-tale-for-january/
@Niall, thanks but the PPR is constantly updated and the January 2013 figure may rise, and rise substantially. What is curious is the IBF didn’t provide an update this morning for January 2013. It published December 2012 month figures on 31st January 2013, so maybe there will be an update at the end of February 2013, but given the speculation that after the tax relief scheme expired, that activity would have died off, you might have expected some steer this morning for January 2013.
I’d be very surprised if the ending of MIR did not impact noticeably upon the mortgage figures for Q3/Q4 2012. Whether there is anything more to it than that we shall see. Next point of interest for me is the closing of Justice Dunne’s lacuna this Spring.
@NWL, Surely some literary license here. A rebound is a ‘spring” or “bounce back” after hitting a hard surface. This looks more like a dead cat’s bounce to me.
Today’s news of an AIB SVR hike (with at least some other banks sure to follow) serves as a nice introduction for all these new mortgagees to a life of indenture.
Had a look at the property price register for the months of December
December 2010 – 1,988
December 2011 – 2,259
December 2012 – 3,683
To examine whether it was a case of a MIR effect or an overall boom in the economy I had a look at the the figures for January
January 2010 – 1,115
January 2011 – 1,027
January 2012 – 1,221
January 2013 – 1,264
I included January 2010 even though there was no December 2009 figure to show what sort of levels where typical in January.
The fact that the jump in Dec 2012 was not continued into Jan 2013 would seem to back up the anecdotal evidence. Basically the end of MIR caused a serious spike in December 2012 and matters returned to normal in January.