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Looking to buy? Surge in number of home buyers getting approval for mortgage

There was a strong rise in the number of home buyers approved for a mortgage in July.

Almost 3,300 people got the green light from their bank to borrow to buy a home.
This is up 490 from the same month last year, the Banking and Payments Federation said.

In percentage terms, the rise was close to 18pc when the new figure is compared with data for July last year.
It was the highest number of mortgage approvals since the banks started collecting aggregate data at the start of 2011.

Mortgage approvals do not always translate into home-loan drawdowns, as potential buyers often get outbid, or can’t find a home they can afford.
Economists said the strong figures showed that the effects of the controversial mortgage lending restrictions imposed by the Central Bank were easing off.

A consultation process conducted by the Central Bank on the impact of the restrictions has a deadline of today for submissions.
The banking figures show there was strong growth in the number of first-time buyers seeking mortgage approval.

Almost 1,600 first-time buyers got approval in July, up more than 200 on the same month last year.
There was also a rise in those trading up, and these buyers now account for around a third of the mortgage market.

Switchers are still a small part of the market, representing just 7.5pc of approvals. But the numbers seeking to switch their mortgage soared by 90pc in the year to July. However, there were just 245 approvals of this type during the year.
The average monthly value of all house loans given approval came to €659m, of which €306m was accounted for by first-time buyers.

The value of mortgages approved rose by 28.5pc when compared with a year ago.
Economist with Merrion Stockbrokers, Alan McQuaid, said: “The figures point to an uptick in mortgage activity since May 2016, after a slow start.”

And economists are now expecting a healthier mortgage market this year.
Economist with specialist bank Investec, Philip O’Sullivan, said he expected mortgage drawdowns of €5.5bn for this year, up by 10pc on 2015.

Dermot O’Leary of Goodbody Stockbrokers said the new mortgage approvals figures show a recovery in mortgage lending.

“The strong approvals growth in the second quarter and into the early third quarter augurs well for a pick-up in lending activity in the second half of the year, and possibly the first few months of 2017,” Mr O’Leary said.
He predicted mortgage lending of €5.2bn for this year.

The higher level of mortgage approvals comes as Bank of Ireland has upped the ante by introducing a new cash-back deal for mortgage customers.

It is adding a loyalty payment to its cash lump sum offer to stop new customers moving to another lender inside five years.
This will effectively increase its original cash-back offer from 2pc to 3pc.

The loyalty payment only applies to those who have a current account with the bank, and is paid after five years.

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