Almost half of new mortgages go to switchers and movers

Brian Hayes

Donal O'Donovan Twitter Email

March 26 2021 02:30 AM

Almost half of mortgage approvals in February were for customers switching from their current bank or moving house.

With a shortage of new homes competition is heating up between lenders for sought after customers with low loan-to-value ratios, including those who have paid off much of their mortgage or are sitting on gains on the value of their own home.

New figures from the Banking & Payments Federation Ireland (BPFI) show a total of 3,651 mortgages were approved in February 2021, up just under 4pc compared to last year. First-time buyers accounted for 54pc of approvals while mover purchasers accounted for 24.7pc and switchers the rest.

The value of mortgages approved rose by 9.4pc year-on-year, well ahead of the gain in customer numbers. For first-time buyers, the average new mortgage approved was €250,000. Assuming a 10pc deposit that suggests first-time buyers can afford to pay around €275,000, although in some cases big savings and parental support could be pushing that higher.

The chief executive of the BPFI, Brian Hayes, said re-mortgage/switching was the fastest growing segment in February, with volumes up 15.1pc versus a year ago. In the past three years, lenders have approved almost 17,900 re-mortgages valued at €4.2bn, he said.

Mortgage approvals do not all translate into draw downs, and the impact on construction sites means those approved in February for a loan may face challenges finding a place to buy. The ESRI estimated this week that the total number of new homes completed this year will be around 15,000. That is down 25pc from last year and less than half the number of new homes most experts believe need to be built every year just to keep up with population growth.

Meanwhile, those who do get a mortgage face paying the most expensive borrowing rates in the Eurozone.

Rates in January were more than double the average for the rest of the currency bloc, new figures from the Central Bank show.

The average new mortgage rate in this country was 2.79pc in January.