There was €9.54bn mortgages drawndowns in total in 2019 in Ireland, according to the publication of fourth quarter drawdown data by the Banking and Payments Federation Of Ireland (BPFI). This is an increase of over 9% year on year (yoy) and represents the highest value in over ten years.
This is essentially in line with Goodbody Stockbrokers full-year forecast (€9.6bn), although there was a slowdown in the final quarter of the year with €2.8bn mortgages drawdown (+5% yoy, down from +11% in Q3), largely on weaker re-mortgaging trends (-10% in Q4).
Drawdowns have continued to grow despite weak drawdowns for existing properties in recent quarters thanks to strong activity in the new homes market, with the former growing by 8% yoy in 2019 to €5.3bn compared to a 13% yoy increase in drawdowns on new properties to €2.7bn.
The bifurcated market was more evident in the fourth quarter, with drawdowns growing by a mere 2% yoy for existing properties while those on new properties continued to grow at a 23% yoy clip.
By purchaser type, drawdown value by first-time buyers grew 15% in the year to €4.9bn, led by a 19% uptick in drawdowns for new properties, although the end of the year was particularly strong for this cohort for new homes thanks to a 27% and 33% uptick in fourth quarter and third quarter, respectively.
Elsewhere, drawdowns in 2019 grew modestly for owner occupiers (+3% yoy) and fell 15% yoy for investors, meanwhile, re-mortgaging/top-up activity grew by 9%, weakening considerably as the year unfolded (-5% in H2, -10% in Q4), and probably explaining why the full year total was just marginally shy of Goodbody's full year estimate.
In addition to the drawdown data, the BPFI has published mortgage approvals for December showing approvals grew by a healthy 8% in value in the three months to December (+6% in November, +5% in October) to €2.7bn and by 3% in volume (unchanged from previous two months) to 11,660 approvals. Like the drawdown data, first-time buyers have driven the headline figures with robust growth in value (+18% yoy) and volume (+12%).
Despite modest growth in approvals for mover purchasers (+2% in value) and a significant fall for individual investors (-18% in value), overall approvals for house purchase grew by 11% in the 3-months to December. Approvals for re-mortgaging fell by 10% in the three-months (- 12% in November), however, Goodbody attribute this to more active engagement by the banks with their existing customers.
According to Goodbody Stocbrokers, "In line with this morning’s strong FTB new homes activity, both Cairn and Glenveagh’s trading updates in recent weeks have pointed to a strong fourth quarter. We are forecasting a further c.€1bn in drawdowns in 2020, once again led by strong activity by first-time buyers."
Source: www.businessworld.ie
