Mortgage Approvals Plunge 2.5% Despite Record €16.7 Billion Value

URGENT UPDATE: Mortgage approvals have plummeted by 2.5%, even as their total value skyrocketed to a record-breaking €16.7 billion in the past year, according to the latest report from the Banking and Payments Federation Ireland (BPFI). This paradox comes as the housing market grapples with rising costs and dwindling supply.

In August alone, 4,536 mortgages were approved, totaling €1,456 million. First-time buyers represented a significant portion, accounting for over 62% of approvals, amounting to €920 million. However, August 2024 saw a stark 17% decrease in approvals compared to the previous month.

Authorities report a notable shift in the mortgage landscape, with re-mortgage and switching activity surging by over 13% in volume and more than 30% in value during the same timeframe.

Tánaiste Simon Harris commented on the rising mortgage values, stating, “The fact that supply isn’t where it needs to be is obviously having a direct impact on costs and the price of a house.” He emphasized concerns about the potential for individuals becoming overstretched financially in this turbulent economic climate.

“We’re living in very turbulent times,” Harris added, underlining the importance of current Central Bank mortgage lending rules that limit borrowing to four times a person’s gross income. He warned against loosening these regulations, which could lead to significant over-leveraging and future financial instability.

Commenting on the BPFI report, Brian Hayes, Chief Executive of BPFI, noted, “Our latest report shows a slowdown in mortgage approval activity, with volumes down by 2.5% year on year.” The decline is particularly pronounced for home purchase mortgages, which fell by 5.1% compared to last year. Despite these drops, overall mortgage values continue to rise, reflecting an increase of 4.1% from August 2024.

As the market evolves, potential homebuyers and industry stakeholders alike must navigate these challenges. The immediate future of mortgage approvals and housing costs remains uncertain, prompting close monitoring of upcoming trends and regulatory changes.

Next Steps: Analysts and buyers will be watching closely as further data is released. The implications for the housing market and individual financial health continue to unfold, demanding urgent attention from both policymakers and consumers. Stay tuned for updates as this situation develops.