Irish residential mortgage lending shows first annual increase since 2006

The positive mood music about Irish residential property continues with the release yesterday by the Irish Banking Federation of mortgage lending statistics for the three months ending 30th September 2012 which showed an appreciable increase over the second quarter but for the first time since 2006 showed an annual increase between Q3,2011 and Q3,2012. With the imminent ending of mortgage tax reliefs which Ministers Noonan and Hayes have sworn blind will not be extended into 2013 and with property tax plans which were delivered to Minister Hogan four months ago about to be made public in the December budget (at latest).

But for the time being at least, we have had three consecutive months of price rises nationally according to the CSO and we’ve had four consecutive months of increases in residential rent, again according to the CSO. The Property Price Register which was launched on 30^th September 2012 pointed towards a stabilisation and slight pickup of transactions with indications that in 2012 the number of transactions will be 6% up on 2011. And yesterday’s IBF mortgage statistics point to more transactions also.

First up, we have the volume of transactions. There were 3,532 mortgages drawn down for house purchase. That’s 25% up from Q2,2012 and 24% up on Q3,2011 but still a massive 89% down from Q3,2006 when there were nearly 30,000 mortgages drawn down in the quarter. So, positive news albeit from a very low base.

The value of mortgages advanced is also up considerably, by 30% for house purchase compared with Q2,2012 but up just 14% on Q3,2011. As with volumes, we’re at the highest quarterly level sinceQ4,2010 when the country turned to the IMF for funding assistance.

Average values of mortgages are also up for first time buyers and movers – by 5% approximately between Q2,2012 and Q3,2012 but are slightly down on a year ago. Buy to Let average drawdowns are substantially down – by 28% compared with Q2,2012 and 31% compared with a year ago.

First time buyers comprised more than 50% of the market, its highest level ever.

So just another indicator of stabilisation – it will be interesting to see if the transparency offered by the Property Price Register and the imminent Budget 2013 announcements will reverse the recent positive developments – the betting on here is that they will, but who knows.

Reacting to yesterday’s mortgage statistics, the Director of Public Affairs at the Irish Banking Federation, Felix O’Regan, stated “whereas data from previous quarters showed that contraction in activity continued to slow, the Q3 data is showing actual growth in activity – something we haven’t seen in some time. This is a very welcome trend and one we might hope to see sustained, particularly in light of reports from market analysts indicating a stabilisation in average house prices in Dublin, for example. Activity during the final quarter of this year will be closely watched as mortgages taken out after 31st December next will not qualify for mortgage interest relief. We will be well positioned to monitor trends more closely over the coming quarters with the help of new mortgage approvals data which we plan to publish shortly as a new lead indicator of future mortgage market activity.”