Mortgage activity slowed in Q2 on lower switching demand but lending to first-time buyers remains robust
Mortgage drawdown volumes fall year-on-year for the first time since Q4 2020, mainly reflecting much lower levels of switching
Average FTB mortgage drawdown value continues to rise, reaching €284,397 in Q2 2023, the highest level since the data series began in 2003
Wednesday 26th July 2023 – Banking & Payments Federation Ireland (BPFI) has today published the latest figures from the BPFI Mortgage Drawdowns Report for Q2 2023 and the BPFI Mortgage Approvals Report for June 2023.
The following are the key figures from the Mortgage Drawdowns Report for Q2 2023:
- A total of 9,896 new mortgages to the value of €2,762 million were drawn down by borrowers during the second quarter of 2023.
- This represents a decrease of 17.4% in volume and 11.9% in value on the corresponding second quarter of 2022.
- A comparison with the previous quarter (Q1 2023) shows a decrease of 5.7% in volume and 3.6% in value.
- First-time buyers (FTBs) remained the single largest segment by volume (60.3%) and by value (61.5%).
- Re-mortgage/switching volumes and values fell by 63.8% and 63.1% year on year respectively.
In addition, BPFI also published today the latest figures from the BPFI Mortgage Approvals Report for June 2023:
- A total of 4,766 mortgages were approved in June 2023 – some 3,013 were for FTBs (63.2% of total volume), while mover purchasers accounted for 1,094 (23%).
- The number of mortgages approved in June fell by 3.3% month-on-month and fell by 20% year-on-year.
- Mortgages approved in June 2023 were valued at €1,356 million – of which FTBs accounted for €862 million (63.6%) and €372 million by mover purchasers (27.4%).
- The value of mortgage approvals fell by 2.9% month-on-month and 18.6% year-on-year.
- Re-mortgage/switching activity fell by 83.2% year on year in volume terms and by 85% in value in the same period.
Speaking on the publication of the data, Brian Hayes, Chief Executive, BPFI said: “Our latest mortgage drawdowns report shows that demand in the market remains strong with 9,896 new mortgages to the value of almost €2.8 billion drawn down by borrowers during the second quarter of 2023. However overall, we can see mortgage drawdown volumes fell on a year-on-year basis (down by 17.4%) for the first time since the slowdown due to Covid in 2020. While much of the decline reflects much lower levels of switching (down 63.8% year on year in volume terms), first-time buyer (FTB) mortgage volumes fell on a year-on-year basis (down by 0.4%) for the first time since 2020.”
“Nonetheless, FTBs remained the largest segment, making up about 63% of both approval and drawdown volumes in Q2 2023. They accounted for almost 82% of home mortgage drawdowns on new properties and 70% of secondhand properties, the highest shares since the data series began.”
Mr Hayes continued: “We also see that the value of FTB drawdowns increased by 7.6% to almost €1.7 billion, the highest Q2 level since 2007. Much of the increase reflects upward trends in average mortgage values, with the average FTB drawdown value reaching €284,397 in Q2 2023, the highest level since the data series began in 2003. The average FTB and mover purchase mortgages on new properties both reached their highest levels since the data series began in 2005 at €325,223 and €353,657.”
Mr Hayes concluded: “Meanwhile, looking at the latest mortgage approval figures for June, we can see approval volumes fell in year-on-year terms for the fifth successive month, mainly reflecting the decline in switching activity. However, similar to what we’re seeing in drawdown figures, FTBs continued to buck the trend with 3,013 FTB mortgage approvals valued at more than €862 million in June 2023, the second highest levels (after May 2023) since the data series began in 2011.”
“It’s too early to say if FTB volume growth will return in Q3 but there were 8,600 FTB approvals valued at almost €2.5 billion in Q2 2023, so there is a strong pipeline for drawdowns later in the year.”
Data Series:
All mortgage approvals data from January 2011 onwards is available in Microsoft Excel format (*.xls) in the BPFI Mortgage Approvals report data series. The BPFI Mortgage Approvals report data series is available to download here.
Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland. Together with its affiliates, the Federation of International Banks in Ireland, and the Fintech & Payments Association of Ireland, BPFI has over 125 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.
Contact: Fiona Murphy, Head of Communications, 087 9740046, fiona.murphy@bpfi.ie.
