Irish mortgage lending falling off a cliff....


#461

Look at the way the YOY monthly figures are going for 2015 so far.
The growth in transactions from last year is slowly but surely dropping away.

Without the CGTE boost this year, the second half of the year is very likely to come in lower than the bumper second half last year. There’s only been one monthly YOY decrease since 2011 (ignore Jul 15 obviously). A bundle of them at the end of this year would be fairly significant IMO as it would demonstrate a peak in transaction volume growth.
Let’s not forget that even with the increased transactions, 2014 was still only ~2% national stock turnover. Topping out and then going lower this year would indicate serious ill health in the market.


#462

As I said some are gasping at straws to justify their position.

Let’s see if I can also torture the data :slight_smile:

Ah yes, after stabilising for a number of months at 3.5k transactions per month volumes surge 14% in June.

Or maybe you would prefer ‘following their collapse transaction volumes remain at 50% of year end levels’.


#463

I prefer “for the first time since the PPR was established, median sale prices in Dublin have fallen for four months in a row”.

Perfectly true, but does it mean anything? I think it means the new CBI rules are biting and people have less to spend. But who knows.


#464

AIB half-yearly report:

investorrelations.aib.ie/content/dam/aib/investorrelations/docs/resultscentre/resultspresentation/aib-half-yearly-financial-report-2015.pdf


#465

At the moment it is just that - a peak in growth.

I think 2015 transactions will probably undershoot 2014, but that’s not the way it is now and we won’t know until the PPR updates for a few more months.

Even if it undershoots 2014, it’s still well ahead of 2013’s numbers. Pinsters reported the market strong & bullish in 2013. (10.3k in whole of 2013 against 8.4k to date in 2014). I could see 2016 still beating 2013.

Look the CB rules are obviously going to have an affect. It remains to be seen the level of that and the robustness of the market.

Throwing around stuff like the market is stone dead, just isn’t useful or accurate at this time. It’s premature which is exactly what I said.


#466

Even with the CB rules there were 11,628 drawdowns (95% of mortgage market), yet there are 24,907 ppr transactions.

Obviously there are timing difference there but it’s evident that cash is still a very significant factor in the market. It’s hard to argue otherwise.


#467

I think a peak in growth at such low stock turnover rates is fairly significant. At 2014 rates, average turnover rate for Irish stock is around 46 years, which is clearly not a sign of a healthy market. It’s 23 years in the UK and is considered abnormally low. Our rate is so astronomically low that it MUST increase. Any sort of flatlining or even negative growth is actually an indication of serious ill health in the market.

Like you say we don’t know if it will happen yet but we’ve worn out discussions with past data so there’s no harm in looking forward to try and project what the future may bring.


#468

I hope I have this graph right.

Looks to me like loan values are under control whilst volumes are steadily ratcheting back to normal. I think Honohan should be quite proud of this.

https://s13.postimg.org/ul9xnp67b/Screen_Shot_2015_08_17_at_10_12_47.png


#469

Analysis of the Q3 2015 BPFI / PwC Mortgage Market Profile figures

bpfi.ie/wp-content/uploads/2 … 3-2015.pdf

Mortgage Lending by Volume
Q4 2014: 7,381
Q1 2015: 5,472
Q2 2015 6,010
Q3 2015 6,976 (3,672 FTB + 2,458 Mover + 364 RIL + 300*50% Re-Mortgage + 5% per Note 1)

In Q4 2014 to Q3 2015 there were 25,839 mortgages by Volume or 2,153 per month

In comparison to
a) Peak lending by Volume:
Peak was Q4 2005 with 35,253 (+5% = 37,015) or 12,339 mortgages a month.
This shows Q3 2015 is a whopping -81.2% lower by Volume than peak in Q2 2005 (6,976/37,015)

b) Annual change in lending by Volume:
In Q4 2013 to Q3 2014 there were 19,095 mortgages by Volume or 1,591 per month
This shows Q4 2014 to Q3 2015 is +35.3% higher by Volume than Q4 2013 to Q3 2014 (25,839/19,095)

Mortgage Lending by Value €m
Q4 2014: 1,356
Q1 2015: 986
Q2 2015: 1,033
Q3 2015: 1,327 (632 FTB + 555 Mover + 45 RIL + 63*50% Re-Mortgage + 5% per Note 1)

In Q4 2014 to Q3 2015 4,754 €million was lent in mortgages by Value or 396 €million per month

In comparison to
a) Peak lending by Value:
Peak was Q3 2006 with €8,521m (+5% = €8,947m) or €2,982m a month
This shows Q3 2015 is a whopping -85.2% lower by Value than peak in Q3 2006 (1,327m/8,947m)

b) Annual change in lending by Value:
In Q4 2013 to Q3 2014 2,302 €million was lent in mortgages by Value.
This shows Q4 2014 to Q3 2015 is +106.5% higher by Volume than Q4 2013 to Q3 2014 (4,754/2,302)

Average Loan by Value €m

First-time Buyer
a) Change since Peak: Q3 2015 172,199 vs Peak Q1 2008 251,831. Fall since Peak -31.6%
b) Annual change: Q3 2015 172,199 vs Q3 2014 166,516. Annual increase +3.4%

Mover Purchaser
a) Change since Peak: Q3 2015 225,622 vs Peak Q1 2008 281,944. Fall since Peak -20.0%
b) Annual change: Q3 2015 225,622 vs Q3 2014 224,431. Annual decrease +0.5%

Residential Investment Letting
a) Change since Peak: Q3 2015 123,795 vs Peak Q2 2008 327,927. Fall since Peak -62.2%
b) Annual change: Q3 2015 123,795 vs Q3 2014 116,806. Annual increase +6.0%

Re-mortgage
a) Change since Peak: Q3 2015 209,256 vs Peak Q1 2008 267,327. Fall since Peak -21.7%
b) Annual change: Q3 2015 209,256 vs Q3 2014 190,246. Annual increase +10.0%

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.”


#470

Thanks Jackal. Great analysis.


#471

Analysis of the Q4 2015 BPFI / PwC Mortgage Market Profile figures

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

Mortgage Lending by Volume
Q1 2015: 5,472
Q2 2015: 6,010
Q3 2015: 6,976
Q4 2015: 7,576 (3,819 FTB + 2,662 Mover +430 RIL + 607*50% Re-Mortgage + 5% per Notes 1-3)

In comparison to
a) Q4 2015 v Peak and Trough by Volume:
Q4 2015 was 7,215 (+5% = 7,576)
Peak was Q4 2005 with 35,253 (+5% = 37,015)
Trough was Q1 2013 with 1,834 (+5% = 1,925)
This shows Q4 2015 is -79.5% lower than Peak and +293.5% higher than Trough

b) Change from Peak and Trough lending by Volume:
Peak was Q4 2005 with 35,253 (+5% = 37,015)
Trough was Q1 2013 with 1,834 (+5% = 1,925)
This shows a change of -94.8% from highest to lowest Volume of mortgages

c) Annual Change by Volume:
In Q1 2014 to Q4 2014 there were 21,432 mortgages by Volume or 1,786 per month
In Q1 2015 to Q4 2015 there were 26,034 mortgages by Volume or 2,169 per month
This shows a change of +21.5% from 12 months previously

Mortgage Lending by Value €m
Q1 2015: 986m
Q2 2015: 1,033m
Q3 2015: 1,327m
Q4 2015: 1,414m (655m FTB + 581m Mover + 48m RIL + 126m*50% Re-Mortgage + 5% per Notes 1-3)

In comparison to
a) Q4 2015 v Peak and Trough by Value €m:
Q4 2015 was 1,347m (+5% = 1,414m)
Peak was Q3 2006 with 8,521m (+5% = 8,947m)
Trough was Q1 2013 with 311m (+5% = 327m)
This shows Q4 2015 is -84.2% lower than Peak and +333.1% higher than Trough

b) Change from Peak and Trough lending by Value:
Peak was Q3 2006 with 8,521m (+5% = 8,947m)
Trough was Q1 2013 with 311m (+5% = 327m)
This shows a change of -96.4% from highest to lowest by Value of mortgages

c) Annual Change by Value:
In Q1 2014 to Q4 2014 3,892m was lent for mortgage by Value or 324m per month
In Q1 2015 to Q4 2015 4,813m was lent for mortgages by Value or 401m per month
This shows a change of +23.6% from 12 months previously

Average Loan by Value €

First-time Buyer
a) Change since Peak: Q4 2015 171,486 vs Peak Q1 2008 251,831. Fall since Peak -31.9%
b) Change since Trough: Q4 2015 171,486 vs Trough Q1 2013 150,292. Rise since Trough +14.1%
c) Annual change: Q4 2015 171,486 vs Q4 2014 167,097. Annual increase +2.6%

Mover Purchaser
a) Change since Peak: Q4 2015 218,127 vs Peak Q1 2008 281,944. Fall since Peak -22.6%
b) Change since Trough: Q4 2015 218,127 vs Trough Q2 2013 199,219. Rise since Trough +9.5%
c) Annual change: Q4 2015 218,127 vs Q4 2014 220,240. Annual decrease -1.0%

Residential Investment Letting
a) Change since Peak: Q4 2015 112,172 vs Peak Q2 2008 327,927. Fall since Peak -65.8%
b) Change since Trough: Q4 2015 112,172 vs Trough Q2 2014 101,606. Rise since Trough +10.4%
c) Annual change: Q4 2015 112,172 vs Q4 2014 110,598 Annual increase +1.4%

Re-mortgage
a) Change since Peak: Q4 2015 206,928 vs Peak Q1 2008 267,327. Fall since Peak -22.6%
b) Change since Trough: Q4 2015 206,928 vs Trough Q4 2012 136,174. Rise since Trough +52.0%
c) Annual change: Q4 2015 206,928 vs Q4 2014 220,650. Annual decrease -6.2%

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.”


#472

€5bn a year in new mortgages. After repayments ireland is still deleveraging in 2015. €5bn in new lending in a country where gnp is what €160bn. Tax receipts €50bn, imports €50bn or thereabouts.

These new mortgage figures show how much people and in particular the banks are willing to ‘put their money where their mouth is’.

Given the relatively healthy general economic feel in 2015 I can only assume the €5bn in new lending is dragged down by unwillingness and inability to lend by the banks while there is so much politically sponsored strategic defaulting going on. The top bankers here haven’t changed and are straining at the leash to lend. But those providing their hard capital are saying hold on here paddy, these are scarce resources that can be deployed elsewhere like the countries that have a functioning law around legal recourse for non payment of mortgages.
Ireland has the honohan brothers. So I await the charlie weston independent column bemoaning the anemic mortgage lending stats and thd hardship for first time buyers denied home ownership because of all the chancing fuckers out there strategically defaulting for the sake of ireland 2016 style.


#473

Did I hear on the radio yesterday that FTB approvals are down 20% since this time last year?

Yes I did:

bpfi.ie/news/mortgage-approv … uary-2016/

Down from 1274 in Feb 2015 to 998 in Feb 2016 or -21%.

Incidentally January 2016 was also down 23% on January 2015 also. Looks like they’re falling since September 2015 which is as far back as the data allows.


#474

This is my favourite presentation for approval volumes which captures the seasonal variations.

Includes: FTB, Mover Purchase
Excludes: RIL, Re-mortgage, Top-up

Clearly shows that 2015 was a very different shaped year with an uncharacteristic droop towards the end, and 2016 has started off lower than one year before for the first time since 2013.

https://s9.postimg.org/8u3aole2n/Screen_Shot_2016_04_07_at_11_08_50.png


#475

2 Points :

  1. This is no reflection of demand whatsoever, more approvals can not be granted by a bank when there are a reduced number of houses to buy
  2. There was a change in definition of what constitutes an approval in January 2016 which I think means that the criterion for what is included is tightened ,
    bpfi.ie/wp-content/uploads/2 … s-2016.pdf

So the volume of mortgages approved can decrease and the amount lent can decrease (due to deposit requirements) at the same time as prices overall increasing purely due to a lack of supply.


#476

Good spot!

Spot the difference:

A mortgage approval is defined as…

Up to December 2015
“…a “firm offer” to a customer of a credit facility secured on a specific residential property. A mortgage approval arises when the lender issues a formal offer of mortgage finance to the customer (whether it be in print or some other durable form) for a specific residential property and after a valuation report and any other necessary documentation have been received.

From January 2016
“…a “firm offer” to a customer of a credit facility secured on a specific residential property. A mortgage approval arises when the lender issues a formal offer of mortgage finance to the customer (whether it be in print or some other durable form) for a specific residential property which contains the Notice of important information to be included in a housing loan agreement specified in the Consumer Credit Act 1995. All mortgage loans must be secured on residential property in Ireland.

It’s not clear to me that the “All mortgage loans must be secured on residential property in Ireland” is new to 2016, depends how you interpret the rather poor presentation.


#477

Is that really correct? Can’t multiple people apply for mortgage approval on the same property?


#478

Number of properties for sale lowest since 2007 + prices falling in SoCoDub - -> rte.ie/news/2016/0411/780899 … ty-prices/


#479

Of course it may just be Daft’s market share that’s falling.


#480

Do you really believe that? :slight_smile:

IMO, government inaction rather than design is going to drive prices back to 2006 levels within 5 years.