Irish mortgage lending falling off a cliff....


#523

Analysis of the Q1 2018 BPFI / PwC Mortgage Market Profile figures

bpfi.ie/wp-content/uploads/ … or-web.pdf

Mortgage Lending by Volume
Q2 2017: 7,474
Q3 2017: 8,894
Q4 2017: 9,662
Q1 2018: 7,231 (3,799 FTB +2,250 Mover + 353 RIL +969*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Volume:
Current: Q1 2018 7,231
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows Q1 2018 is -80.5% lower than Peak and +275.6% higher than Trough

b) Change from Peak and Trough lending by Volume:
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows a change of -94.8% from highest to lowest Volume of mortgages

c) Annual Change by Volume:
In Q2 2016 to Q1 2017 there were 22,329 mortgages by Volume or 1,861 per month
In Q2 2017 to Q1 2018 there were 26,030 mortgages by Volume or 2,169 per month
This shows a change of +16.6% from 12 months previously

Mortgage Lending by Value €m
Q2 2017: 1,603m
Q3 2017: 1,967m
Q4 2017: 2,162m
Q1 2018: 1,630m (822m FTB + 569m Mover + 51m RIL + 221m *50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Value €m:
Current: Q1 2018 1,630m
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows Q1 2018 is -81.8% lower than Peak and +399.2% higher than Trough

b) Change from Peak and Trough lending by Value:
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows a change of -96.4% from highest to lowest by Value of mortgages

c) Annual Change by Value:
In Q2 2016 to Q1 2017 4,520m was lent for mortgages by Value or 377m per month
In Q2 2017 to Q1 2018 5,732m was lent for mortgages by Value or 478m per month
This shows a change of +26.8% from 12 months previously

Average Loan by Value €

First-time Buyer
a) Change since Peak: Q1 2018 216,458 vs Peak Q1 2008 251,831. Fall since Peak -14.0%
b) Change since Trough: Q1 2018 216,458 vs Trough Q1 2013 150,292. Rise since Trough +44.0%
c) Annual change: Q1 2018 216,458 vs Q1 2017 193,951. Annual increase +11.6%

Mover Purchaser
a) Change since Peak: Q1 2018 253,072 vs Peak Q2 2008 327,927. Fall since Peak -10.2%
b) Change since Trough: Q1 2018 253,072 vs Trough Q2 2014 101,606. Rise since Trough +28.0%
c) Annual change: Q1 2018 253,072 vs Q1 2017 240,034. Annual increase +5.4%

Residential Investment Letting
a) Change since Peak: Q1 2018 144,847 vs Peak Q1 2008 267,327. Fall since Peak -55.8%
b) Change since Trough: Q1 2018 144,847 vs Trough Q4 2012 136,174. Rise since Trough +42.6%
c) Annual change: Q1 2018 144,847 vs Q1 2017 128,840. Annual increase +12.4%

Re-mortgage
a) Change since Peak: Q1 2018 228,120 vs Peak Q1 2008 267,327. Fall since Peak -14.7%
b) Change since Trough: Q1 2018 228,120 vs Trough Q4 2012 136,174. Rise since Trough +67.5%
c) Annual change: Q1 2018 228,120 vs Q1 2017 217,025. Annual increase +5.1%

Note 1: BPFI states “We estimate that the data covers well in excess of 95% of the mortgage market.” So I add 5% to the Volume and Value figures.

Note 2: I’ve included 50% of each quarter’s Re-Mortgages figure, as BPFI defines it as “a loan which is issued by one lender to refinance an existing mortgage with another lender. This may or may not include further equity release.”

Note 3: I exclude Top-ups, as BPFI defines it as “a further mortgage advance to an existing borrower which is issued to finance expenditure other than house purchase.”


#524

Central Bank have published an Economic Letter: New Mortgage Lending Activity in a Comparative Context

centralbank.ie/news/article … 6-May-2018


#525

April sees jump in number of mortgage approvals
independent.ie/business/per … 61229.html


#526

Can the surge in credit growth induce another property bubble as the OECD are warning

irishtimes.com/business/economy/signs-of-overheating-in-irish-economy-oecd-warns-1.3513610

Its an interesting dynamic now though. We have a shortage of house building, blamed partly on a lack of construction finance; All political parties and NGOs are shouting for construction activity yet when this increases…it’s high alert for a bubble. Looking at The Jackal’s mortgage growth analyses above, it’s an 18.6% yoy increase in mortgage lending but still a fraction of peak lending. I suppose the commentators don’t want to be accused of not sounding the alarm. Is this fair comment or how we sleepwalk into the next crisis?

G.


#527

It is a fraction of the Celtic Tiger years, and probably at least half of the growth is due to Price increases, rather than a rake of new borrowers coming on the scene. The banks are still really only treading water in terms of net new lending. We continue to pay down/redeem mortgages, and the Banks recycle this cash as Gross new lending, with maybe a bit more on top, which is slightly more than it was in 2015-17. It’s hardly earth moving stuff though.

Plus as has been said many times, fresh capital is not attracted to a dysfunctional mortgage market where the asset cannot be foreclosed. So long as the ‘where’s my nama’ agenda reins supreme, nobody sane will inject their own fresh capital to the Irish market.


#528

Well this isn’t going to help

rte.ie/news/business/2018/0626/973329-counter-cyclical-capital-buffer/


#529

Analysis of the Q2 2018 BPFI / PwC Mortgage Market Profile figures

bpfi.ie/publications/bpfi-m … drawdowns/

Mortgage Lending by Volume
Q3 2017: 8,894
Q4 2017: 9,662
Q1 2018: 7,231
Q2 2018: 8,435 (4,547 FTB + 2,495 Mover + 339 RIL + 1,304*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Volume:
Current: Q2 2018 8,435
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows Q2 2018 is - 77.2% lower than Peak and + 338.1% higher than Trough

b) Change from Peak and Trough lending by Volume:
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows a change of -94.8% from highest to lowest Volume of mortgages

c) Annual Change by Volume:
In Q3 2016 to Q2 2017 there were 29,973 mortgages by Volume or 2,498 per month
In Q3 2017 to Q2 2018 there were 34,221 mortgages by Volume or 2,852 per month
This shows a change of +14.2% from 12 months previously

Mortgage Lending by Value €m
Q3 2017: 1,967m
Q4 2017: 2,162m
Q1 2018: 1,630m
Q2 2018: 1,905m (983m FTB + 635m Mover + 47m RIL +298*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Value €m:
Current: Q2 2018 1,905m
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows Q2 2018 is -78.7% lower than Peak and +483.3% higher than Trough

b) Change from Peak and Trough lending by Value:
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows a change of -96.4% from highest to lowest by Value of mortgages

c) Annual Change by Value:
In Q3 2016 to Q2 2017 6,220m was lent for mortgages by Value or 518m per month
In Q3 2017 to Q2 2018 7,663m was lent for mortgages by Value or 639m per month
This shows a change of +23.2% from 12 months previously

Average Loan by Value €

First-time Buyer
a) Change since Peak: Q2 2018 216,096 vs Peak Q1 2008 251,831. Fall since Peak -14.2%
b) Change since Trough: Q2 2018 216,096 vs Trough Q1 2013 150,292. Rise since Trough +43.8%
c) Annual change: Q2 2018 216,096 vs Q2 2017 200,728. Annual increase +7.7%

Mover Purchaser
a) Change since Peak: Q2 2018 254,586 vs Peak Q2 2008 327,927. Fall since Peak -9.7%
b) Change since Trough: Q2 2018 254,586 vs Trough Q2 2014 101,606. Rise since Trough +28.7%
c) Annual change: Q2 2018 254,586 vs Q2 2017 248,826. Annual increase +2.3%

Residential Investment Letting
a) Change since Peak: Q2 2018 138,943 vs Peak Q1 2008 267,327. Fall since Peak -57.6%
b) Change since Trough: Q2 2018 138,943 vs Trough Q4 2012 136,174. Rise since Trough +36.7%
c) Annual change: Q2 2018 138,943 vs Q2 2017 131,181. Annual increase +5.9%

Re-mortgage
a) Change since Peak: Q2 2018 228,302 vs Peak Q1 2008 267,327. Fall since Peak -14.6%
b) Change since Trough: Q2 2018 228,302 vs Trough Q4 2012 136,174. Rise since Trough +67.7%
c) Annual change: Q2 2018 228,302 vs Q2 2017 230,615. Annual decrease -1.0%

Note 1: BPFI states “We estimate that the data covers well in excess of 95% of the mortgage market.” So I add 5% to the Volume and Value figures.

Note 2: I’ve included 50% of each quarter’s Re-Mortgages figure, as BPFI defines it as “a loan which is issued by one lender to refinance an existing mortgage with another lender. This may or may not include further equity release.”

Note 3: I exclude Top-ups, as BPFI defines it as “a further mortgage advance to an existing borrower which is issued to finance expenditure other than house purchase.”

EDIT 1/1/18: fixed few errors in tots


#530

Analysis of the Q3 2018 BPFI / PwC Mortgage Market Profile figures

bpfi.ie/wp-content/uploads/ … ebsite.pdf

Mortgage Lending by Volume
Q4 2017: 9,662
Q1 2018: 7,231
Q2 2018: 8,435
Q3 2018: 9,909 (5,247 FTB + 3,077 Mover + 403 RIL + 1,420*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Volume:
Current: Q3 2018 9,909
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows Q3 2018 is - 73.2% lower than Peak and + 414.7% higher than Trough

b) Change from Peak and Trough lending by Volume:
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows a change of -94.8% from highest to lowest Volume of mortgages

c) Annual Change by Volume:
In Q4 2016 to Q32017 there were 31,275 mortgages by Volume or 2,606 per month
In Q4 2017 to Q3 2018 there were 35,236 mortgages by Volume or 2,936 per month
This shows a change of +12.7% from 12 months previously

Mortgage Lending by Value €m
Q4 2017: 2,162m
Q1 2018: 1,630m
Q2 2018: 1,905m
Q3 2018: 2,256m (1,153m FTB +776 Mover + 57m RIL +325*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Value €m:
Current: Q3 2018 2,256m
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows Q3 2018 is -74.8% lower than Peak and +590.8% higher than Trough

b) Change from Peak and Trough lending by Value:
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows a change of -96.4% from highest to lowest by Value of mortgages

c) Annual Change by Value:
In Q4 2016 to Q3 2017 6,671m was lent for mortgages by Value or 556m per month
In Q4 2017 to Q3 2018 7,953m was lent for mortgages by Value or 663m per month
This shows a change of +19.2% from 12 months previously

Average Loan by Value €

First-time Buyer
a) Change since Peak: Q3 2018 219,779 vs Peak Q1 2008 251,831. Fall since Peak -12.7%
b) Change since Trough: Q3 2018 219,779 vs Trough Q1 2013 150,292. Rise since Trough +46.2%
c) Annual change: Q3 2018 219,779 vs Q3 2017 206,856. Annual increase +6.2%

Mover Purchaser
a) Change since Peak: Q3 2018 252,076 vs Peak Q2 2008 327,927. Fall since Peak -10.6%
b) Change since Trough: Q3 2018 252,076 vs Trough Q2 2014 101,606. Rise since Trough +27.5%
c) Annual change: Q3 2018 252,076 vs Q3 2017 256,159. Annual decrease -1.6%

Residential Investment Letting
a) Change since Peak: Q3 2018 140,215 vs Peak Q1 2008 267,327. Fall since Peak -57.2%
b) Change since Trough: Q3 2018 140,215 vs Trough Q4 2012 136,174. Rise since Trough +38.0%
c) Annual change: Q3 2018 140,215 vs Q3 2017 126,796. Annual increase +10.6%

Re-mortgage
a) Change since Peak: Q3 2018 228,786 vs Peak Q1 2008 267,327. Fall since Peak -14.4%
b) Change since Trough: Q3 2018 228,786 vs Trough Q4 2012 136,174. Rise since Trough +68.0%
c) Annual change: Q3 2018 228,786 vs Q3 2017 229,525. Annual decrease -0.3%

Note 1: BPFI states “We estimate that the data covers well in excess of 95% of the mortgage market.” So I add 5% to the Volume and Value figures.

Note 2: I’ve included 50% of each quarter’s Re-Mortgages figure, as BPFI defines it as “a loan which is issued by one lender to refinance an existing mortgage with another lender. This may or may not include further equity release.”

Note 3: I exclude Top-ups, as BPFI defines it as “a further mortgage advance to an existing borrower which is issued to finance expenditure other than house purchase.”


#531

Why has lending for mortgages in Ireland suddenly stalled?

irishtimes.com/business/per … -1.3682825


#532

In the midst of boom, we are in the death of the mortgage contract

Lending at 1988 levels

rte.ie/news/business/2018/1102/1008192-mortgage-lending-here-at-about-1988-levels/


#533

Q4 2017: 9,662
Q1 2018: 7,231
Q2 2018: 8,435
Q3 2018: 9,909

I can’t read beyond the IT paywall but your figures indicate it hasn’t stalled (where stall is understood in the usual sense of the word: stop/halt/nosedive. Maybe they are referring to a halt in growth?

Lest it be forgotten, in 1988 those 36,000 drawdowns would, in all likelyhood, have involved a single earner. It now takes two earners to buy the same house today. That’s one big transfer of wealth.


#534

I think there are a number of reasons why mortgage drawdowns are lower -

  1. The age of the average house buyer has gone back up to the level that it was in the late 1980s i.e. over 30. The era of 25 year olds buying houses (i.e. the last boom) was an anomaly.
  2. The people in the majority house buying cohort (i.e. the 30-40s) that can afford to buy a house is lower - for one of the reasons that it was in the late 1980s - house prices were too expensive relative to wages (the other was emigration)
  3. Using the increase in population is not a good measure - we have a large number of people who have come to work here - but not with the intention of staying here for ever - the current state of the housing market is not encouraging them to do so
  4. The concept of people buying a starter home (on their own) , then a forever home (with someone else) is gone. Buying and selling two properties in a short time frame is too expensive, and too risky - prices fluctuate relatively rapidly in this country and it is difficult to sell and buy in the same market. There has also been a feeling that supply is restricted - I don’t think it is at the moment - there are 5600 houses for sale in Dublin on Myhome - in November!

#535

These factors are directly related, and also related to the longer amount of time it takes to get established in the jobs market.

Even with a relatively boring, frugal lifestyle you’re going to be late 20s before you have enough deposit to buy an apartment, most people will be over 30. So they’re just skipping that stage and going straight to co-ownership.

I don’t think the price volatility is the issue since selling and buying need to be done at the same time. That is difficult due to lack of bridging finance and long transaction time. If it takes months to sell and months to buy, lining up those two events is tricky.


#536

Yes, slow in growth as opposed to the drop in overall mortgage drawdowns. It’s a poor headline for the article


#537

Analysis of the Q4 2018 BPFI / PwC Mortgage Market Profile figures

bpfi.ie/wp-content/uploads/ … ebsite.pdf

Mortgage Lending by Volume
Q1 2018: 7,231
Q2 2018: 8,435
Q3 2018: 9,909
Q4 2018: 9,662 (5,249 FTB + 3,085 Mover + 375 RIL + 985*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Volume:
Current: Q4 2018 9.662
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows Q4 2018 is -73.9% lower than Peak and +401.9% higher than Trough

b) Change from Peak and Trough lending by Volume:
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows a change of -94.8% from highest to lowest Volume of mortgages

c) Annual Change by Volume:
In Q1 2017 to Q4 2017 there were 32,514 mortgages by Volume or 2,709 per month
In Q1 2018 to Q4 2018 there were 35,236 mortgages by Volume or 2,936 per month
This shows a change of +8.4% from 12 months previously

Mortgage Lending by Value €m
Q1 2018: 1,630m
Q2 2018: 1,905m
Q3 2018: 2,256m
Q4 2018: 2,162m (1,111m FTB +781m Mover + 51m RIL +232m*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Value €m:
Current: Q4 2018 2,162m
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows Q4 2018 is -75.8% lower than Peak and +562.1% higher than Trough

b) Change from Peak and Trough lending by Value:
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows a change of -96.4% from highest to lowest by Value of mortgages

c) Annual Change by Value:
In Q1 2016 to Q4 2017 7,083m was lent for mortgages by Value or 590m per month
In Q1 2017 to Q4 2018 7,953m was lent for mortgages by Value or 663m per month
This shows a change of +12.3% from 12 months previously

Average Loan by Value €

BPFI forgot to upload the Q4 2018 time series, so I can’t see these figures yet

Note 1: BPFI states “We estimate that the data covers well in excess of 95% of the mortgage market.” So I add 5% to the Volume and Value figures.

Note 2: I’ve included 50% of each quarter’s Re-Mortgages figure, as BPFI defines it as “a loan which is issued by one lender to refinance an existing mortgage with another lender. This may or may not include further equity release.”

Note 3: I exclude Top-ups, as BPFI defines it as “a further mortgage advance to an existing borrower which is issued to finance expenditure other than house purchase.”


#538

45% of all properties bought with cash or savings

rte.ie/news/business/2019/0 … t-monitor/


#539

Anyone know how that compares internationally? I thought such a high proportion in recent years was due to low volumes.


#540

Here’s an article about cash sales from 2016 with more figures for context and comparison.
thejournal.ie/housing-market-ireland-cash-buyers-funds-2-2895200-Jul2016/

Large international investment firms is likely one of the main factors behind a surge in cash-only Irish house sales.
" individual household cash buyers “are complemented by institutional investors such as the growing indigenous Real Estate Investment Trust (REIT) sector and international investors”."

Boom peak = 150,000 transactions, cash buyers accounting for 25% of these sales.
Bust trough = 21,000 transactions in 2010
Cash-only peaking >60% during the start of 2013. And has dropped since.

“The high number of cash buyers in recent years has been one of the possible factors cited for the increase in property prices, with some claiming that wealthy investors and funds with increased purchasing power have increasingly priced ordinary buyers out of the market.”
[edit; fixed spelling]


#541

I recall that internationally approx 40-50% of property transactions are cash deals.


#542

Charlie Weston: ‘Investors and downsizers are the cash kings in property realm’
independent.ie/opinion/comm … 29861.html

Other sources of cash buyers mentioned…
The bank deposits looking for better returns (100Bn)/BTL investors/Downsizers/TradeUppers/RichParents