Irish mortgage approvals continued their post-lockdown recovery in July according to new Banking and Payments Federation of Irelnd (BPFI) data released this morning. 

Approvals for house purchase in July rose by 61% relative to June, but this still meant that approvals were down 36% year on year (yoy) (-54% yoy in June). July 2019 was a particularly tough comparative.

Measured against the average of the 12 months leading up to the pandemic, approvals for house purchase in July are down by 18%. In the context of the scale of economic shock that the country has experienced, Goodbody Stockbrokers say this is a relatively benign outcome and suggests that potential home owners are more likely to be working in sectors less likely to be affected by the crisis. 

This is also a trend that is visible in other countries. UK mortgage approvals for July will be published next week, but assuming 50,000 in July (current consensus), the run-rate (-48% yoy) over the past three months is very similar to that seen in Ireland (-52% yoy). 

First-time buyers led the recovery in July, with approvals growing by 78% month on month but were down by 29% yoy (-55% yoy in June). Approvals for movers (-47% yoy) continued to fall sharply, as did for investors (-48% yoy). Remortgaging fell by 15% yoy, a similar pace to June, while equity release volumes fell by 38% yoy.

There was an increase in the average mortgage size approved (+5% yoy), such that the fall in the value of mortgages approved (-30% yoy) was somewhat less than the volume approved (-34% yoy).

According to Goodbody Stockbrokers, "We increased our mortgage lending forecasts last month following the better than expected Q2 lending drawdown outcome. Without placing too much attention on one month, the trends suggest that risks may lie to the upside for our €6.9bn forecast."

Source: www.businessworld.ie