This afternoon, the Irish Banking Federation (IBF), which claims to represent banks which account for more than 95% of all mortgage lending in (the Republic of) Ireland, has released its mortgage approval statistics for the three months ending 30th June 2012. The euro figures show a slightly stronger than usual increase over the traditionally quiet Q1 with lending overall up by 16% over the dismal first quarter of 2012, though lending is down by 16%.(coincidentally!) from Q2, 2012. During Q2, 2012 a total of €524m was approved compared with €450m in Q1,2012 and €624m in Q2, 2011. Lending is down an astounding 95% from the peak of €55.6bn in Q4,2005. So, modestly good results but given the very low base, for practical purposes there is still a mortgage lending drought. When you consider than Bank of Ireland ALONE was supposed to make €1.5bn available for mortgage lending in 2012, and with a market total of €1.1bn in the first two quarters, you can readily see that all is not as planned. Here is thevalue table of mortgage approvals in €m.
In terms of euro values, it is noteworthy that Buy to Let mortgages continue to wither whilst first time buyers and movers are up. Here is the volume (number of mortgages approved) table.
The number of mortgages approved is healthier than the euro values, with 3,225 approved in Q2, 2012 up 23% from Q1, 2012 and down just 9% from a year ago in Q2, 2011. First time buyers account for most of the increase in volume. And lastly, here is the average value table.
There has been a steep decline of 8% in Q2, 2012 in the average first time buyer mortgage which now stands at €151,000 down from €164,000 in Q1, 2012 and a peak of €252,000. Remember you can’t directly translate that into house prices because mortgages don’t take account of deposit levels, and in 2012 the loan to value is lower than it was at the peak.
Commenting on the latest data, Pat Farrell, IBF Chief Executive, stated “These latest figures show that contraction in activity continues to slow significantly and the second quarter of this year has actually recorded modest growth in both first-time buyer and mover-purchaser activity – something not seen since the first quarter of 2006. Taken together with recent comments from property economists signalling stabilisation in house prices in key sectors of the Dublin market, we will be looking to the next quarter’s data for confirmation of the trend indicated in this quarter. The period to the year end is key as mortgages taken out after 31st December next will not qualify for mortgage interest relief.” Pat is trying to paint the best possible picture from the table, but is unfortunately talking bollocks, as in Q2, 2011 there was also an increase in both first time buyer and mover activity, and indeed there is a seasonality to Irish mortgage lending with Q1 traditionally being quietest. And in respect to stabilisation in “key sectors of Dublin”, it is more estate agents rather than economists making pronouncements. Key difference, that.
You can see the mortgage lending analysis for Q1, 2012 here.