Composition of mortgage market has changed in favour of home purchasers

August 23, 2010

• Nearly 75% of new mortgage credit now going to home purchasers
• First-time buyers consolidate position as largest market segment
• Year-on year decline continues, but increase quarter-on-quarter

 The IBF/PwC Mortgage Market Profile published today shows that over 7,800 new mortgages to the value of €1.31 billion were issued during the second quarter of 2010. 

While the volume of new lending in Q2 2010 is down 38.3% compared Q2 2009, it is up 12.5% on the previous quarter (Q1 2010) – reflecting the seasonal pick-up in lending this time of the year.  However, within the continuing pattern of year-on-year decline in the market overall, the first-time buyers (FTBs) segment is again seen to be the most resilient in recording the lowest rate of decline and in remaining the single largest segment of the total market – albeit a smaller market.

The following are among the key features of the Q2 2010 data: 

• The number of loans to first-time buyers increased by 27.8% in Q2 compared to Q1 2010.  First-time buyers remain the single largest segment of the market by volume, accounting for 38% of all loans drawn down – the highest level since the IBF/PwC Mortgage Market Profile series began (Q1 2005). 
• Home purchasers – first-time buyers and mover purchasers combined – now account for almost 75% of new mortgage lending by value – up from 41% in Q1 2008. 
• While average loan sizes continue to trend downwards across all market segments, the average first-time buyer loan has fallen below €200,000, a level last recorded in Q2 2005 – reflecting lower house prices and loan-to-values (LTVs).

Commenting on the data, IBF Chief Executive, Pat Farrell, stated:

“This latest data confirms that the composition of the mortgage market has changed significantly over the last year or so.  With first-time buyers and mover purchasers now accounting for nearly three-quarters of new mortgage lending by value, the market – albeit a smaller one - is now dominated by those in the process of providing a home for themselves.  At the same time, the latest comparative interest rate data confirms that average mortgage rates here are still among the lowest in Europe.”  

The IBF/PwC Mortgage Market Profile can be viewed on the web here.   

Note:  Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.  

Further Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644