Decline in switching activity leads to drop in new mortgage approvals in February
A decline in switching activity following a busy period that saw many borrowers lock in fixed rates, contributed to a fall in new mortgage lending last month according to new data.
Mortgage approvals fell by 13.3% in February when compared to the same month last year, the information from the Banking and Payments Federation Ireland shows.
In total there were 3,378 new homes loans given the green light, down 8.6% compared to January.
First time buyers account for 56% of the total number, with mover purchasers making up nearly 24%.
The mortgages approved during the month were valued at €945 million.
This was a reduction of 6.9% compared to January and 8.1% versus February in 2022.
€528 million of that was for first time buyer loans and €263 million went to mover purchasers.
“Despite the slowdown we have seen in February, it is important to note that mortgage activity remains at historically high levels with almost €1.6 billion in approvals for FTBs and mover purchasers in the first two months of the year,” said Brian Hayes, Chief Executive of the BPFI.
“Demand is particularly strong among FTBs, which accounted for almost 56% of the volume and value of mortgage approvals in February, with the Revenue Commissioners reporting over 11,000 applications for the Help to Buy scheme in the year to date.”
Switching, top-ups and other non-purchase mortgage activity fell by 30.9% compared to the same month a year ago and 32.6% in value terms in comparison to February of last year.
“This fall off was expected given the substantial wave of switching undertaken by customers in recent months with almost €4.3 billion in new non-purchase approvals (mainly switching) in the twelve months ending January 2023,” Mr Hayes said.
The switching activity was driven by people opting for fixed rates to counteract rising interest rates, as well as some mortgages holders moving loans as a result of Ulster Bank and KBC Bank Ireland’s exit from the country.