Banking & Payments Federation Ireland (BPFI) recently released key figures from its Mortgage Drawdowns Report for Q1 2023 and the Mortgage Approvals Report for March 2023, indicating a general slowdown in mortgage activity despite strong demand. Brian Hayes, Chief Executive, BPFI, provided expert insights into the data.
According to the BPFI Mortgage Drawdowns Report for Q1 2023, borrowers drew down a total of 10,908 new mortgages worth €2,868 million during the first quarter of 2023. Notably, this indicates a 10.1% increase in volume and a 14.1% increase in value compared to Q1 2022. However, when compared to the previous quarter (Q4 2022), the report points to a decline of 31.3% in volume and 34.1% in value.
Mr. Hayes, commenting on the data, mentioned, “Our latest mortgage figures show that in terms of mortgage drawdowns, demand remains strong. However, overall, the figures point to a continued year-on-year slowdown as the impetus from switching decreases.”
First-time buyers (FTBs) continue to form the largest segment both by volume (50.8%) and value (51.1%). Interestingly, re-mortgage/switching volumes and values have experienced a 22.5% and 25.3% rise year-on-year but saw a significant fall of 52.1% and 53.7% from the previous quarter.
On the other hand, the BPFI Mortgage Approvals Report for March 2023 revealed that a total of 4,520 mortgages were approved in that month, out of which 62% (2,801) were for FTBs. The report also notes a 33.8% month-on-month increase and a 1.2% year-on-year decrease in the number of mortgages approved in March.
“The trends in the home buyer segments remain positive,” Mr. Hayes noted. “First-time buyer (FTB) and mover purchase drawdown volumes reached their highest Q1 levels since 2007 and 2008, respectively. Looking forward, FTB approval volumes rose by 15.7% year on year, with FTBs accounting for 62% of approval volumes, the highest share since data became available in July 2014.”
The report also highlighted that re-mortgage/switching activity fell significantly by 54.4% year on year in volume terms and by 53.1% in value.
Despite the declining trend in overall mortgage activity, the value of mortgage approvals rose by 37.7% month-on-month and 7.7% year-on-year, reaching €1,301 million in March 2023. FTBs accounted for €819 million (62.9%) of this value.
“We can also see that lending values continue to grow, driven by higher housing prices,” Mr. Hayes added. “At more than €292,000, the average FTB approval in March was the highest since detailed approval data became available in July 2014.”
In conclusion, the data suggests that while overall mortgage activity might be slowing, first-time buyers continue to make significant strides in the market. The consistent growth of lending values, driven by increasing housing prices, also underscores the evolving landscape of the housing market in Ireland.