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.