Mortgage approvals bounce back in October

Mortgage approvals bounce back in October

New data published by the Banking & Payments Federation Ireland (BPFI) this morning shows that following a weak summer period, mortgage approvals bounced back in October.

The volume of approvals overall grew by 14% year on year (yoy), with the value of those approvals growing by 11% yoy. Approvals for house purchase grew by 6% yoy in October in volume terms (+5% yoy in value terms). This followed annual volume declines in three of the previous four months.

Approvals increased for both first-time buyers (+5% yoy by volume, +7% yoy by value) and movers (+9% yoy by volume, +1% yoy by value). Buy-to-Let approvals were also up but
remain a very small part of lending. Remortgaging approvals continue to surge, with the volume up by 71% yoy in October, reflecting falling rates and increased equity in the system
over the past twelve months.

The data suggests approvals for the ten months to October are relatively flat on 2017 levels, but this must be seen in the context of the surge in approvals in early 2017. Relative to 2016 levels, the volume of approvals for house purchase is up 27%, with the value up by 44%.

According to Goodbody Stockbrokers, "It is well known that some of the banks used exemptions outside the macroprudential rules early in the year and were forced to close off for exemptions over the summer. As we noted previously, it is possible that some banks were overly cautious in that regard and may be opening again towards the end of the year or believe that these mortgages will likely be drawn down in 2019 in any case."

They added, "We have been of the view for some time that the weakness in 2018 was of a timing nature. The approvals trends in October suggest that this may be the case."

Source: www.businessworld.ie