In August, mortgage approvals experienced a further increase on both a monthly and yearly basis. This bounce back can be attributed to the significant rise in loan switching, as the fixed-rate periods for numerous homeowners draw to a close in 2024. Irish lending institutions greenlit 4,650 mortgage applications in the past month, showing an upturn of 2.6 per cent when compared with the previous year and displaying a 7.4 per cent increase from August 2023. This was equivalent to a monetary value of almost €1.4 billion, stated the Banking and Payments Federation of Ireland (BPFI) on Friday.
Following last year’s reduced activity after a wave of switching during 2022. As homeowners sought to secure their interest rates for fixed periods, this resulted from the European Central Bank (ECB)’s decision to raise rates. In August, approval was given for some 443 switching and remortgage loans totalling a value of €117 million, highlighting a 33 per cent surge in volumes year on year and a 42.9 per cent increase in terms of value, as indicated by the data.
The resurge in switching action is still in its early stages, but the newest numbers suggest a positive trend in the market, according to BPFI’s CEO, Brian Hayes. Loan approvals have seen a rise for the fifth consecutive month, albeit starting from a low point, says Hayes.
First-time buyers (FTBs) persist in leading the market, comprising 61.5 per cent of overall approvals during this timeframe. A total of 2,862 FTB loans got the go-ahead in August, marking a 1.2 per cent rise on the year. However, there was a 13 per cent decline compared to the previous month, reflecting the seasonal high between May and July for home loan approvals.
According to Hayes, the data indicates that approval activity overall stays sturdy.
August 2024 witnessed the highest recorded First Time Buyer (FTB) value and number of transactions since records began in 2011, with up to 30,583 FTB mortgages valued at €9.2 billion being sanctioned throughout the year leading to August 2024. This signals the largest FTB value for any twelve-month span since 2011. This information was confirmed by the previous Fine Gael MEP who also mentioned that nearly 50,000 mortgages had received approval during that year until August, out of which 61.8% belonged to FTB approvals.
In addition, he observed that the frequency of ‘help to buy’ applications had already outpaced the total count of the previous year by the end of August 2024, indicating a robust short-term forecast for FTB mortgage drawdowns.
On the contrary, a continued reduction was noticed in mortgage approvals for mover-purchasers amidst a scarcity of resale homes in the market; statistics revealed a decrease by 3.7% year on year, finally settling at just 991 following a minor resurgence in July.
Estate agency Sherry FitzGerald reported last month that merely 12,785 resale properties were up for sale in July, a mere 0.6% of the nation’s total private housing inventory. This figure was 7% less than the same period of the previous year and 29% lower than the summer of 2020 during the peak of the pandemic. However, a slight improvement in the supply of second-hand homes has been noted since the commencement of the year, coinciding with declining interest rates, the estate agent further added.