Increase in mortgage approvals continues in August as switching activity picks up

Mortgage approvals continued to rebound in August on both a monthly and annual basis amid an ongoing pickup in loan switching as thousands of homeowners come to the end of their fixed-rate periods in 2024.
Irish lenders approved a total of 4,650 mortgages last month, up 2.6 per cent on the same month last year and 7.4 per cent ahead of August 2023 in total value terms of almost €1.4 billion, the Banking and Payments Federation of Ireland (BPFI) said on Friday.
The uptick in approvals follows a slowdown period last year after a flurry of switching activity during 2022 as homeowners looked to lock in their interest rates for fixed periods as the European Central Bank (ECB) began raising rates.
Some 443 switching and remortgage loans were approved in August with a total value of €117 million, a 33 per cent jump in volumes year on year and up 42.9 per cent in terms of value, according to the data.
While the recovery in switching activity remains nascent, the latest figures suggest “some positive momentum” in the market, said BPFI chief executive Brian Hayes with approval volumes reaching their highest level since January 2023. August was also the fifth consecutive month in which switching loan approvals increased, Mr Hayes said, “albeit from a low base”.
First-time buyers (FTBs), meanwhile, continued to dominate the market, representing 61.5 per cent of total approvals in the period.
A total of 2,862 FTB loans were approved in the month, up 1.2 per cent on the year, but down 13 per cent from the previous month as the market passed the peak May to July period for home loan approvals.
Mr Hayes said the data shows overall approval activity remains “robust”.
“In fact, August 2024 saw the highest FTB August values and volumes since the series began in 2011,” he said. “On an annualised basis, 30,583 FTB mortgages valued at €9.2 billion were approved in the 12 months to August 2024, the highest FTB value for any 12-month period since the data series began in 2011.”
The former Fine Gael MEP said almost 50,000 mortgages had been approved in the 12 months to the end of August, of which 61.8 per cent were FTB approvals.
“Given the number of ‘help to buy’ applications to the Revenue Commissioners in the first eight months of 2024 (25,359) has already exceeded the total number of applications in 2023, indications continue to point to a strong pipeline for FTB mortgage drawdowns in the short term.”
Meanwhile, the continued decline of mover-purchaser mortgage approvals this year amid a shortage of second-hand properties for sale is also evident in the data with volumes down 3.7 on the year to just 991 after a slight pickup in July.
Last month, Sherry FitzGerald said there were just 12,785 second-hand properties listed for sale in July, equating to just 0.6 per cent of the State’s entire private housing stock. This was 7 per cent down on the same month last year and 29 per cent below the level seen in the summer of 2020 at the height of the pandemic, although the supply of second-hand homes has improved marginally since the start of the year as interest rates have begun to fall, the estate agent said.