Mortgage activity declines as cost of living squeeze dampens market – The Irish Times

The number and value of mortgages approved in July fell from the previous month, amid speculation that the ongoing cost-of-living squeeze could trigger a slowdown in the state’s housing market.

Figures from the Banking & Payments Federation Ireland (BPFI) show a total of 5,255 mortgages were approved last month, with first-time buyers accounting for 45% of that number. The total was down nearly 12% from the previous month, but up 4.4% from the same period last year.

In value, mortgages approved in July amounted to 1.4 billion euros, down nearly 13% from the previous month. Much of the activity in July was driven by no-purchase mortgage activity, which includes transfers and top-ups. This category grew 95.8% in volume year-on-year to 1,741, and 147.6% year-on-year in value to 441 million.

The BPFI figures came as the rate of increase in house prices nationwide slowed in May to 14.4%, continuing a decelerating trend seen in recent months. While the headline rate of house price inflation remains very high, a series of interest rate hikes planned by the European Central Bank are expected to dampen demand in the coming months and mortgage approvals figures in July could be the first signal.

The ECB surprised investors last month with a 50 basis point rate hike amid fears inflation was taking root in the eurozone economy. With headline data pointing to a further rise in core inflation, another rate hike in September is seen as a done deal.

“Our latest mortgage data shows continued growth in mortgage activity which is primarily driven by no-purchase mortgages – primarily those that pay off or switch mortgages,” said BPFI chief executive Brian Hayes.

“Looking at the annualized numbers that allow us to more accurately assess key emerging trends, there were 55,689 mortgage approvals in the 12 months ending July 2022, worth $14,753 million. This represented an increase in volume of 0.40% and an increase in value of 1.17% compared to the twelve months ending in June 2022.”

“No-purchase mortgage activity, most of which are transfers, has increased sharply since May, reflecting both market competition and the fact that mortgage customers continue to seek better rates,” he said. declared.

“We welcome that mortgage customers are actively taking steps to minimize the impact of the ECB’s planned interest rate hikes, whether they are switching mortgage lenders or renegotiating with their current lender.”

Central Bank data shows the value of renegotiated home loans at fixed interest rates for more than a year jumped to 1.2 billion euros in the second quarter of this year, from 0.7 billion euros over the same period of 2021.