Mortgage Lending down in 2013

Mr.McLovin

The number of new mortgages and the amount of lending to home buyers fell in the fourth quarter of 2013 compared to the same period in 2012.

The Irish Banking Federation/PwC mortage market profile shows banks advanced €2.5 billion in new mortgage loans in 2013, €141m less than in 2012.

Mortgage lending figures remain at levels not seen since the early 1970s.
At the peak of the credit boom in 2006 and 2007 more than €10 billion in homeloans were being advanced each quarter, four times higher than the total figure for last year.

Earlier this year the Association of Expert Mortgage Advisors estimated the optimum figure for mortgage lending in Ireland is around €10 billion a year.
The IBF noted that the total number of mortgage loans issued during 2013 was down 5.6% compared to 2012.

It said this was partly due to the ending of tax relief on mortgage interest for first time buyers which it may have had an impact on demand for credit.

very interesting, there seems to be a bottomless pit of cash buyers driving the market at the moment, how long can this go on for I wonder maybe its the mythical bounce actually happening...

is that there is such a limited stock that even lending at the rates reported are outstripped by demand?

it all looks unsustainable to me. a drip of construction looks on the cards, a drip of repossessions and a drip of NAMA properties and lands being released could dampen the resurge in prices along with the drip of credit available

D3PO

I never liked the comparrison of mortgage lending based on value. It really is a meaninless measure.

The number of mortgages drawn down is a far better messure of things, and even more so is a measure of actual house sales.

I mean 2.5billion v 2.64billion that could easily be accounted for by slightly larger deposits being used or more house sold ouside of dubloin than the pervious year it doesnt really mean anything.

I mean its possible or even probably theres large market manipulation by cash buyers but the value of total mortgage lending really is a useless indicator in that regaard.

Shedzafew

The final quarter of 2012 saw substantially more mortgages been applied for/drawn down as it was the final few months where mortgage interest relief could be obtained.

I would say that the 2013 V's 2014 figures will provide a better indication.

newtothisdub

Yes it does seem a high percentage of cash sales in 2013 of nearly 16,000 homes, but when you consider there were over 110,000 mortgages given in 2006 (we can all agree it will never be that mad level) ,it doesn't seem too high a figure (perhaps mostly newly retired people trading down?). I tried to upload figures from 2005 to 2013 but they showed up funny but I have the 3 different sources:

· New mortgages* given out (*excluding re-mortgages and top-ups which don’t affect housing market)- from the IBF

· New home builds –from Construction Industry Federation and/or Dept of Environment.

· Homesales –from the property register

I thought the figures for new home builds 2013 should be in by now and that we would have figures available for house sales numbers before 2010 (but this is Ireland after all!). But thankfully the IBF figures and the property register can now give us the accurate percentage of cash sales (54% for 2013 compared to 12% for 2010).

The 3different sources are:

www.propertypriceregister.ie, http://www.ibf.ie/gns/publications/research/researchmortgagemarket.aspx,http://cif.ie/news-feed/statistics/109-housing-statistics/263-house-completions-per-year.html

subpar

One important fact to bear in mind, whilst there may not be a bottomless pit of cash out there , the amount of savings on deposit in the banks is very high for a country of roughly 2.5 million adults.

You also have bear in mind that many sellers who get cash for there house , go back into the market and use the cash they received to reinvest in property.

Frank Lee Midere

D3PO wrote: »

I never liked the comparrison of mortgage lending based on value. It really is a meaninless measure.

The number of mortgages drawn down is a far better messure of things, and even more so is a measure of actual house sales.

I mean 2.5billion v 2.64billion that could easily be accounted for by slightly larger deposits being used or more house sold ouside of dubloin than the pervious year it doesnt really mean anything.

I mean its possible or even probably theres large market manipulation by cash buyers but the value of total mortgage lending really is a useless indicator in that regaard.

Assuming that houses sold for 200K on average, the cash position was

200,000 * 16,000 = 3,200,000,000

so about 60% of the market. There may be 3.2B available this year ( although, of course if there is to be substantial increases that figure will have to increase). I can see that market getting spooked.

newtothisdub says 54%, so it looks like the prices were cheaper than I thought.

Glenbhoy

subpar wrote: »

One important fact to bear in mind, whilst there may not be a bottomless pit of cash out there , the amount of savings on deposit in the banks is very high for a country of roughly 2.5 million adults.

You also have bear in mind that many sellers who get cash for there house , go back into the market and use the cash they received to reinvest in property.

or pay off the mortgage outstanding on the property.

Glenbhoy

D3PO wrote: »

I never liked the comparrison of mortgage lending based on value. It really is a meaninless measure.

The number of mortgages drawn down is a far better messure of things, and even more so is a measure of actual house sales.

I mean 2.5billion v 2.64billion that could easily be accounted for by slightly larger deposits being used or more house sold ouside of dubloin than the pervious year it doesnt really mean anything.

I mean its possible or even probably theres large market manipulation by cash buyers but the value of total mortgage lending really is a useless indicator in that regaard.

I disagree, I think the actual amount advanced is a huge indicator of the current economic climate, mainly because, we know that banks want to give out as much money as they can as that is their business, that's where profits and bonuses come from.
The fact that the amounts banks have loaned has decreased every year since 2006 surely has to put the sustainability of this 'recovery' into question.

gaius c

Mr.McLovin wrote: »

very interesting, there seems to be a bottomless pit of cash buyers driving the market at the moment, how long can this go on for I wonder maybe its the mythical bounce actually happening...

is that there is such a limited stock that even lending at the rates reported are outstripped by demand?

it all looks unsustainable to me. a drip of construction looks on the cards, a drip of repossessions and a drip of NAMA properties and lands being released could dampen the resurge in prices along with the drip of credit available

We've just taken advantage of the bounce and sold an apartment in Cork. It was mainly cash buyers and the two who got into a bidding war putting it €11k over asking were both ex-public sector who took early retirement and had pension lump sums burning holes in their pockets.
The earlier interest was from a wider spectrum. For example, one was an ex-Pfizer operator with a big redundancy payoff looking for an apartment for his daughter in college/investment later.

In a way, it's a good thing in that real money is being used to pay down debt and eventually help the banks deleverage but it's also a symptom of just how unimaginative Irish investors really are and the lack of yield in other investment classes.

moxin

Cash buyers are growing and are a slight majority in the market. The Irish Times goes a bit more in depth
http://www.irishtimes.com/business/sectors/financial-services/mortgage-lending-down-last-year-1.1702778

For 2013 "the number of mortgages issued fell by 5.6 per cent down to 14,985 and the value of mortgages dropped by a similar percentage, down to €2.5 billion."

Cash buyers dominating at 54% of the market.
"“On the latter issue, we estimate that only 46 per cent of transactions were carried out using a mortgage last year, down from 56 per cent in 2012,” he said.

From the IBF
http://www.ibf.ie/gns/media-centre/news/14-02-25/IBF_Housing_Market_Monitor_shows_increased_activity_in_housing_market_nationally_but_growing_concerns_for_supply_issues_in_Dublin.aspx

the Q4 2013 IBF Housing Market Monitor shows the following picture in 2013 as a whole, compared to 2012:

* 7% increase in the number of properties listed for sale

* 10% increase in the number of housing market transactions

*6.1% increase in the level of mortgage approvals with a decline of 5% in the level of drawdowns

The level of drawdowns declined in 2013 when compared to 2012 http://sw.arekibo.com/IBF_Monitor_Q4_2013.pdf

There were just under 13,500 transaction-related mortgages issued
in 2013, compared to just over 14,000 in 2012.

Mr.McLovin

http://www.irishtimes.com/business/sectors/financial-services/lending-to-irish-households-fell-to-2005-levels-in-february-1.1744692

Lending to Irish households continued to fall in February, as demand for loans and mortgages continued to decline.

The most substantial decrease was for mortgages, which fell by €340 million over the month.

Things don't seem to be getting any better for lending...