Mortgage approvals rebound in July as first-time buyers drive activity

Mortgage approvals rebounded in July on both a monthly and an annual basis, led by first-time buyers and supported by a nascent revival in activity in the loan switchers market as some homeowners come to the end of fixed-rate periods.
A total of 5,313 home loans were approved by Irish lenders during the month, up 11.9 per cent on a year earlier, according to data from Banking & Payments Federation Ireland (BPFI). The market was in the midst of a slowdown in the year-earlier period after a flurry of switching activity that took off in 2022 when the European Central Bank (ECB) started hiking rates.
Approvals rose 18.6 per cent month-on-month in July.
The value of mortgages approved in the month rose 18.8 per cent on the year to €1.61 billion. It increased by 20.2 per cent on June.
“The mortgage approval figures for July were very strong and run counter to the activity we’d seen in previous months, when there was a flatlining-to-declining trend,” said Diarmaid Sheridan, an analyst with Davy.
Mr Sheridan said would-be borrowers may be growing more confident about falling official interest rates. The ECB lowered its main lending rate by a quarter of a percentage point in June to 4.25 per cent and is widely expected to follow up with a similar reduction when its governing council meets next, on September 12th.
First-time buyers accounted for almost 63 per cent of approvals, by value, during July, while people moving to another home made up a further 27 per cent, the BPFI figures show.
“First-time buyers’ approval volumes and values reached their highest levels since the [data] series began in 2014, up 12.8 per cent and 21 per cent, respectively, with values topping €1 billion for the first time in a one-month period,” said BPFI chief executive Brian Hayes.
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The value of switching and remortgage activity increased by 27.3 per cent on the month and 15.3 per cent on the year, albeit from a low base, to €105 million.
“Overall, the report indicates robust mortgage activity, with 49,384 mortgage approvals in the 12 months ending July 2024, of which almost 31,000 were first-time buyer mortgages, signalling a particularly positive pipeline for first-time buyer mortgage drawdowns,” said Mr Hayes. “Furthermore, applications to the Revenue Commissioners for the Help to Buy scheme increased by 45 per cent year-on-year in the first seven months of 2024 to almost 24,000.”
The Government’s Help to Buy plan helps first-time buyers build up the deposit required under Central Bank rules to secure a loan by allowing borrowers claim refunds on income and deposit interest retention tax paid in the State over the four years before a loan is taken out.
Some 33,000 new homes are on track to be completed this year, in line with the figure for 2023, according to the Economic and Social Research Institute (ESRI). However, Taoiseach Simon Harris said on Sunday that almost 40,000 new homes would be completed this year, and reiterated his pledge to build a quarter of a million new homes over the next five years.
There were fewer than 12,750 home completions in the first half of this year, according to the Central Statistics Office (CSO). However, the construction of almost 33,800 homes commenced during the period, more than double the figure for a year earlier, Department of Housing figures show.
The three remaining banks accounted for 91 per cent of new mortgages written in the first half of this year, albeit marginally down from 93 per cent for the whole of 2024, as nonbank lenders have begun to become more competitive again on the back of a decline in market interest rates.