Mortgage approvals hit a 10-year high – but the numbers don’t tell the full story of the real estate market


New figures from the Banking and Payments Federation Ireland (BPFI) show that a total of 5,033 mortgages, worth almost € 1.3 billion, were approved in July – the highest number of every month since BPFI started collecting data in 2011.

On an annualized basis, 53,511 mortgages were approved in the twelve months ending July 2021, valued at € 13.1 billion. This is an increase of 3.15% compared to the twelve months ending in June 2021 and an increase in value of 3.72% compared to the same period.

While the numbers suggest an impressive recovery from the Covid-19 pandemic for the housing sector, if we dig deeper into the numbers, the rebound may not be as strong as it initially appears.

Break down the numbers

Of the 5,033 mortgages that were approved last month, first-time home buyers (FTBs) were approved for 2,766 mortgages (55% of total volume), while home buyers accounted for 1,272 (25, 3%).

This was a 3.3% drop in approval volumes from June, but compared to last July, approval volumes were up 48.2%.

In total, mortgages approved in July 2021 were valued at € 1.2 billion, of which € 707 million (55.1%) and moving buyers € 382 million (29.7%). The value of mortgage loan approvals increased 0.6 percent month-on-month and 58.3 percent year-on-year.

What is a mortgage loan approval?

A mortgage loan approval is defined as a “firm offer” to a customer of a secured credit facility on a specific residential property.

A mortgage loan approval occurs when the lender issues a formal mortgage financing offer to the client (whether in printed or other durable form) for a specific residential property that contains the notice of important information to be included in a housing loan contract specified. in the 1995 Consumer Credit Act.

All mortgages must be secured against residential property in Ireland.

A sold sign is displayed in front of a house

What was said

Speaking on the latest figuresBrian Hayes, Managing Director of BPFI, said: “The latest mortgage approvals for July show continued growth, particularly for FTB mortgages. In total, nearly € 1.3 billion in mortgages have been approved, the most in a month since BPFI began collecting this data in 2011. ”

“Looking at the annualized numbers that allow us to more accurately assess key emerging trends, there were 53,511 mortgage approvals in the twelve months ending July 2021, valued at nearly $ 13.2 billion. euros – again, the highest level since the start of the data series.

“The value of approvals has more than doubled from the twelve months ending October 2016, driven by growth in FTB loans and re-mortgages or conversion. “

“These are significant numbers and very well signal a strong pipeline for withdrawal activity later in the year.”

The numbers may not paint a full picture of the real estate market

Although Hayes says these numbers show continued growth in the housing market, there are a number of factors that we need to consider when analyzing them in order to get the full picture.

As Joey Sheahan, Credit Manager at Hypothè, 2020 has been a tumultuous year for the housing industry as activity in the market was very low due to the initial foreclosure.

A woman looks out of a local estate agent’s window in Dublin city center

“Year-over-year comparisons of mortgage approval numbers are not currently the most telling, as the market has been a real roller coaster during Covid,” said Sheahan.

“As the global market booms, we are seeing many borrowers renewing their mortgage approvals because their previous approvals didn’t give them enough time to see and close a deal on a home.

“Others were unable to obtain previous approval due to their membership in the Wage Subsidy for Employment (EWSS) program.

“These issues were particularly difficult during the foreclosure in the first four months of the year, so mortgage withdrawal numbers could be artificially high.”

Figures in context

While the numbers suggest that things are improving dramatically in the housing sector, it’s important to remember that the mortgage market was still relatively depressed in July of last year due to uncertainty surrounding the trajectory of the pandemic. which has affected the property market in general.

Figures released by the Central Statistics Office earlier this month show that the real estate market continues to be fueled by factors related to the pandemic, such as increasing savings and lower than expected supply.

Transaction prices in June 2021 were 6.9% higher than they were in the same month last year and the spread of price increases was nationwide.


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