In a recent blog post we spoke about how there were signs of life in the mortgage market with AIB, BOI and PTSB coming out and promising to increase lending for the year.
Both AIB and Bank of Ireland spoke of doubling their figure to approx € 2 billion each for 2013 and even PTSB who had virtually shut their doors to mortgages in 2012 announcing they had €450m to lend.
With the mortgage market having been on life support for the last two years I think we were clinging to any hope we could find.
Further green shoots however were visible when statistics just released by the Irish Banking Federation for the last quarter of 2012 show a big rise in the number of mortgages granted;
- An increase of 56.3% from the same quarter a year earlier and although some of this was down to the late rush to avail of the TRS (Tax relief at source) the overall increase year on year from 2011 to 2012 was 27%.
- Although still increasing from reduced levels any increase has to be good for the credit starved market.
- One statistic showed the number of mortgages granted in 2012 mirrored the exact same figure for 1972.
- If we compare this to as recent as 2006 a massive € 39.8 billion was advanced, we will be lucky if that figure for 2013 reaches € 3 billion.
It just shows where we have fallen to.
First-time buyers and to a smaller degree those trading up are responsible to the majority of this lending.
Banks look on first-time Buyers as the lucky ones who managed to get through the downturn without any major debt hanging over them. With tracker mortgages no longer being available, the higher variable rate climate is proving attractive again to Banks. At the end of the day profits are all that really motivate these institutions.
Good secure occupations (are any in this climate?), clean bank accounts and most importantly proven ability to repay are what the banks are looking for.
Once you fulfill these characteristics the banks are willing to lend. The process may take longer than it possibly should but the main point after 5 years of decline the banks are slowly beginning to lend again.