Soaring rents see 75 first-time buyers get mortgage approval daily in January

Mortgage approvals rose by 12 per cent in January, as rising rents saw a surge in first-time buyers looking to get a rung on the property ladder. However, the data also shows a slowdown from the growth rate highs of last May/June.

Figures published on Tuesday by the Banking and Payments Federation show that in January, 3,145 people or couples received mortgage approval in the month, up by 11.6 per cent on the year, at a combined value of €695 million, up by 20 per cent on the year. Rising prices were partly behind the sharp rise in the value of mortgages approved, with the value of the average mortgage up by 8 per cent.

A surge from first-time buyers saw 1,500 applications in the month, up by 7.4 per cent on December, and by 8.1 per cent on the year, accounting for 48 per cent of all those applying.Those trading up were the other sizeable cohort, and combined, these two accounted for 77 per cent of all applications, or 81 per cent by value.

There was again a sharp rise in the number of investors applying for mortgages, up by 13.5 per cent on a volume basis, and by 18.3 per cent when looked at by value. However, it’s off a very low base, and just 364 buy-to-let mortgages were approved in the month.

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The switching market looks finally to be stepping up a gear, and was the fastest growing sector in the month, up by 77 per cent on the year, although again from a low base, with just 364 people/couples looking to switch during the month.

“ With greater levels of competition on mortgage pricing and rising levels of equity, this share is likely to rise further,” said Dermot O’Leary, economist with Goodbody Stockbrokers.

Mr O’Leary said that latest uptick offers “further confirmation that the nine-year deleveraging period in the Irish mortgage market is at an end”.

While the latest figures do show a slow-down in growth, and are the slowest since May 2016, Mr O’Leary said that this is “to be expected”, given the boom experienced at the end of 2016/early 2017.

“We expect a further slowing in growth in the next two months, but the longer-term trend remains upward,” he said, forecasting new mortgage lending to grow by 20 per cent in 2018 .