Growth in mortgage approvals, drawdowns continued in Q3

mortgage approvals

Mortgage drawdown activity rose in volume terms by 40.9 per cent year on year and was up 42.3 per cent by value

There was continued strong growth in both mortgage approvals and drawdowns during Q3 as homebuyers returned to the market following a steep drop-off last year during the pandemic.

The latest data from Banking and Payments Federation Ireland (BPFI) said there were 11,479 mortgage drawdowns in the quarter, valued at €2.8 billion ($3.25 billion).

Mortgage drawdown activity rose in volume terms by 40.9 per cent year on year (YOY) and was up 42.3 per cent by value.

There were 9,124 mortgages drawn down to purchase property at a total value of €2.3 billion ($2.67 billion). This was 43.3 per cent higher on the previous year in number and 45.8 per cent in terms of aggregate value.

First-time buyers continue to dominate the market, accounting for 6,047 of the loans drawn down, accounting for two-thirds of the total. An additional 2,838 loans were drawn down by people moving home.

Lending for residential investment is also rising substantially in percentage terms, with 239 buy-to-let loans drawn down in the period, a rise of 39 per cent year on year.

By value, the highest rise was among those moving homes, where the sum lent in aggregate was 53.5 per cent ahead of last year. Banks continue to be risk averse on buy to let, with just €34 million ($39.45 million) lent in this market, compared with €1.5 billion ($1.74 billion) to first-time buyers.

Apart from property purchase, there was a 37.6 per cent rise in the number of people topping up existing mortgages, to 739, with €68 million ($78.90 million) lent into this section of the market.

The rate of increase in homeowners switching providers to secure better terms or remortgaging their homes continues to lag the market at just under 30 per cent. The value of such business was ahead by 24.9 per percent on the third quarter of 2020, at €402 million ($466.46 million), with 1,616 people looking to switch or remortgage.

BPFI chief executive Brian Hayes said the data showed continued growth in both mortgage approvals and drawdowns.

Almost 54,400 mortgages were approved in the 12 months ending September 2021, valued at almost €13.5 billion ($15.66 billion), suggesting a strong pipeline for future demand as we move into the last quarter of the year, he said.

Although switching remains a small part of the market, Mr Hayes said the almost 7,000 homeowners who secured approval to switch mortgage in the past 12 months was the highest annualised level on record.

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