Major rise in mortgage approvals...

... despite Central Bank rules

THERE’S been a major jump in mortgage approvals this year, despite tight Central Bank rules to prevent overheating in the market.

Figures from the Banking and Payments Federation Ireland’s approval report showed a 13.6% year-on-year rise and a monthon-month increase of 11.4%.

A total of 4,262 mortgages were approved in October of this year, with almost half of these being firsttime buyers. People selling their home and buying a new property accounted for an additional 30%.

Mortgages approved in October were valued at €929million, of which first-time buyers accounted for €446million and those moving home represented €303million. The value of mortgage approvals saw a yearon-year rise of over 11%, as well as a 13% month-on-month increase.

Re-mortgage, or switching approvals, rose year-on-year by 71% in volume and by 71% in value terms.

The volume of mortgage approvals reached 45,316 in the 12 months ending in October, and exceeded €10billion for the first time since the data series began in 2011.

The release of these figures follows calls from surveyors that mortgage lending rules should be tweaked as the current system is causing ‘price spikes’ early in the year.

Under current Central Bank rules, anyone buying a house can only borrow a maximum of 3.5 times their salary. However, banks are allowed to make an exemption to these rules in 20% of cases for first-time buyers and 10% of non-first-time buyers.

The director-general of the Society of Chartered Surveyors Ireland, Áine Myler, told its national conference last week: ‘We are concerned that the management of exemption mortgage supply is skewing market values and distorting demand across a calendar year, which is creating price spikes during periods when credit is available and almost stopping market activity when it’s not.’

The Central Bank said last week that its restrictions on mortgage borrowing will not change.