Mortgage approvals surge, adding further pressure to the housing market

According to the Banking & Payments Federation Ireland (BPFI), the number of new mortgages approved by banks in May jumped 7.4% compared to April. Of the €1.2bn in new mortgages approved last month, first-time buyers accounted for €643m, or 55.4%.

The new figures come as a range of reports were published this week confirming that the shortage of supply of appropriate homes is resulting in significant house price increases.

A report from property website MyHome.ie in association with Davy shows prices rising by 6.7% across the country over the past three months. Homes outside Dublin have seen the largest price increase, up more than 7% for the second quarter, and up 13.6% compared to 2020.

Speaking on the latest mortgage figures BPFI chief executive Brian Hayes said that May has proven to be yet another very strong month for mortgage approvals activity, especially for first-time buyers.

“Similar to the trend we saw emerge last month, we have seen a doubling of activity across many mortgage categories,” he said.

“It is important we view these figures in the context of how the country was operating in May 2021 compared to 12 months earlier.

While a number of Covid restrictions were lifted in May, lenders and customers had also adjusted much better to working within the restrictions and this is clearly borne out by the figures.”

In the 12 months ending May 2021, there were 48,935 mortgage approvals, valued at a total of €11.9bn. During this period, more loans were approved for home buyers/builders than in any 12-month period since the data series began in 2011 at 38,882. In value terms, approvals for home buyers or those building neared €10bn for the first time.

“These are significant figures, and very much signal a robust pipeline for drawdown activity later in the year,” Mr Hayes said.

MyHome.ie managing director Angela Keegan said it appears that the savings generated by homebuying professionals during various lockdowns have helped fuel property price inflation while also diluting the effect of the Central Bank’s mortgage lending rules.

Her comments are backed up by Joey Sheahan, head of credit at homes loan broker MyMortgages.ie.

We’re seeing much larger deposits as a result of pandemic savings, which are allowing people to look at larger properties than they might have otherwise had the financial capacity to do,” he said.

“Coupled with larger deposits, there is a desire to create home working spaces, and so we’re seeing people stretching for four and five-bed properties as a result.

“Tech workers, in particular, are favouring larger homes, which will allow for home working in the longer term.”