A slowdown in the market meant the number of new mortgages approved in July was down 9.7% on the same month last year and 0.4% on June, despite continued strong first time-buyer activity.
New data from Banking and Payments Federation Ireland shows 4,747 new home purchase loans got the go-ahead in the month.
First-time buyers accounted for 61.5% of them and mover-purchasers 24.2%.
“Our latest mortgage approval figures show that, despite a wider market slowdown, first-time buyer (FTB) activity remains strong,” said Ali Ugur, Chief Economist of the BPFI.
“Volumes and values rose by 22.8% and 26.7%, respectively, year-on-year in July 2023, the fifth successive month in which FTB mortgage approvals have risen in year-on-year terms.”
“This sustained growth meant that almost 30,000 FTB mortgages (29,754) valued at nearly €8.4 billion (€8,365 million) were approved in the twelve months ending July 2023, the highest annualised levels since the data series began.”
Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors, said it’s clear that, for many first-time buyers, even with increased mortgage rates, it’s still cheaper to buy than to rent.
“Those age between 26 and 35 who are living at home to save a deposit, are on the move and with the support of the Help to Buy and First Home schemes, are taking the plunge and buying their first home,” he said.
“A growing trend has emerged in the Irish housing market whereby first-time homebuyers are receiving generous gifts from their parents to alleviate the financial burden of house deposits.”
“As the housing market continues to present fresh challenges for aspiring homeowners, parental assistance has become a valuable lifeline for many young individuals and families.”
Overall, the total value of the mortgages approved in the month came to €1.36 billion with first-time buyers making up a similar proportion of that value as they did of the volume.
Total value stayed the same compared to June, but was down 6.7% when compared to the same period last year.
Re-mortgage/switching activity dropped by 78.6% in volume terms year-on-year and by 80.3% in value in the same period, likely because people who were moving in response to departing banks and rising rates have now settled into new mortgages.
“While FTBs accounted for almost 62% of the volume and value of mortgage approvals in July, the annualised value of mover purchase approvals reached almost €3.9 billion in the twelve months ending July, the highest value since the series began,” said Mr Ugur.
“However, this in part reflects rising average mortgage values with the average mover purchase approval exceeding €340,000 for the first time, at €340,957 in July 2023.”