Serious pressure on the Irish housing market is showing no signs of easing, with the number of permitted mortgages rising to just under € 12 billion over the past 12 months.
The latest banking sector data show that more mortgages were approved for home buyers and developers last year than in any 12-month period since they first started filing numbers in 2011.
The number of new mortgages approved by banks in May jumped 7.4% from April, according to the Banking and Payments Federation of Ireland (BPFI). Of the 1.2 billion euros in new mortgages approved last month, first-time buyers accounted for 643 million euros, or 55.4%.
The new numbers come after a number of reports were released this week confirming that a lack of supply of suitable homes is driving house prices up significantly.
A report by the real estate website MyHome.ie, co-authored with Davy, shows prices across the country have risen 6.7% over the past three months. Homes outside Dublin saw the largest increases in prices, up more than 7% in the second quarter and 13.6% over 2020.
Speaking about the latest mortgage data, BPFI chief executive Brian Hayes said May proved to be another very strong month for mortgage approval activity, especially for novice buyers.
“Similar to the trend that emerged last month, we are seeing a doubling in activity in many categories of mortgages,” he said.
“It is important that we view these numbers in the context of how the country performed in May 2021 compared to 12 months earlier.
In the 12 months ended May 2021, 48,935 mortgages were approved for a total of € 11.9 billion. During this period, more loans were approved for home buyers / builders than in any 12-month period since the start of data collection in 2011 – 38,882. In value terms, permits for home buyers or those who build for the first time approached 10 billion euros.
“These are important numbers and they are very signaling that a reliable pipeline is in place to cut production at the end of the year,” said Mr. Hayes.
MyHome.ie Managing Director Angela Keegan said the savings generated by housing professionals during various restrictions helped fuel inflation in property prices, as well as weakened the central bank’s mortgage lending regulations.
Her comments are supported by Joey Sheehan, head of the loan broker MyMortgages.ie.
“Combined with the larger mines, there is a desire to create a home workspace, and so we see that as a result, people are drawn to four and five-bed apartments.
“Technicians, in particular, tend to favor larger homes that will allow them to work from home in the long run.”