Mortgage approvals slump as lockdown keeps buyers at home

MORTGAGE approvals slumped in January as the lockdown pulled the rug from under potential home-buyers.

Activity is usually up after Christmas but this year approvals were down 644 to 3,355, a fall of 16% in January compared to December.

A year ago, approvals were up by 301 to 3,265, a 10% increase – a reversal which experts pinned on the latest lockdown preventing people arranging new deals or viewing homes.

Brian Hayes, head of the banks’ group Banking and Payments Federation Ireland, said: ‘If you go back to April last year there was a significant lull, that’s why it would be down. But they have come back significantly since September.

The problem in January was the lockdown. December’s year-on-year increase is from people catching up from the earlier lockdowns.’

A total of 3,355 mortgages were approved in January – first-time buyers (FTBs) were approved for 1,709 mortgages (50.9%) while mover purchasers accounted for 911 (27.2%).

Mortgages approved in January 2021 were valued at €823million – of which FTBs accounted for €409million – and mover purchasers for €271million.

The value of mortgage approvals fell by 16% month-on-month and rose by 11% year-on-year, but the sector remains upbeat about the year. Mr Hayes added: ‘Our latest data shows mortgage approval activity performed well in January particularly when we take into account that Level 5 restrictions were in place throughout the month.

‘We saw continued year-on-year growth in both approval volumes and value especially amongst first-time buyers and mover purchasers.

‘This points to a solid pipeline for drawdown activity as we move in to 2021. It’s also interesting to note the 10% year-on-year increase in both the volume and value in mortgage switching which demonstrates that lenders are continuing to support customers through the switching process.’