Growth in Mortgage Activity in Q1 Driven by Lending to First-Time Buyers and switchers

Banking & Payments Federation Ireland (BPFI) has today published the latest figures from the BPFI Mortgage Drawdowns Report for Q1 2022 and the BPFI Mortgage Approvals Report for March 2022. 

The reports show continued growth in mortgage activity driven mainly by first-time buyers (FTBs) and re-mortgage/switching. For FTBs, approval growth was modest at 1.1% year on year in March but much stronger for drawdowns in Q1 (9.9%) reflecting strong approvals activity in late 2021 and into 2022. Re-mortgage/switching activity has grown strongly in recent quarters, with drawdown volumes increasing by 27.7% year on year in Q1 2022 and approvals up by 32.8% year on year in March 2022.

Average home purchase mortgage almost €18,000 higher than in Q1 2021

The figures also show a sharp rise in home purchase mortgage drawdowns, with the average home purchase mortgage at €263,476, almost €18,000 higher than in Q1 2021, and the second highest level since the data series began in 2003 (the highest average drawdown was €268,220 in Q1 2008).  

The following are the key figures from the Mortgage Drawdowns Report for Q1 2022. 

• A total of 9,910 new mortgages to the value of €2,513 million were drawn down by borrowers during the first quarter of 2022. 
• This represents an increase of 9% in volume and 17.3% in value on the corresponding first quarter of 2021.  
• FTBs remained the single largest segment by volume (52.3%) and by value (51.6%).  
• The average home purchase mortgage drawdown has increased sharply with the average FTB drawdown of €250,137 at its second highest level since the data series began in 2003, almost €20,000 higher than the same time last year (and only about €1,700 less than the peak in Q1 2008).  The average mover purchase mortgage meanwhile reached a new high of €293,817, some €17,000 higher than a year earlier.
• New analysis in this quarter’s report shows some 62.1% of homebuyer (FTB and mover purchase) mortgage drawdowns were originated directly by lenders (including applications in branches/tied agents, online or via telephone) in Q1 2022 while the remainder applied through brokers. This was the lowest proportion since Q3 2010 and compares with an average of 79.3% in the decade ending 2020.

In addition, BPFI also published today the latest figures from the BPFI Mortgage Approvals Report for March 2022:

• A total of 4,576 mortgages were approved in March 2022 – some 2,420 were for FTBs (52.9%) of total volume) while mover purchasers accounted for 946 (20.7%).
• Mortgages approved in March 2022 were valued at €1,208 million – of which FTBs accounted for €655 million (54.2%) and €284 million by mover purchasers (23.5%).
• The number of mortgages approved in March rose by 5.8% year-on-year while the value of mortgage approvals rose by 13.6% year-on-year.

Speaking on the publication of the data, Brian Hayes, Chief Executive, BPFI said: “Our latest mortgage data is showing continued growth in mortgage activity which is being driven mainly by first-time buyers (FTBs) and those re-mortgaging or switching, which is evidence of the choice and competition in the mortgage market and consumers ability to use that choice to their advantage”. 

One of the standouts from this quarter’s drawdown data is undoubtedly the sharp rise we are seeing in average home purchase mortgage drawdowns. In Q1 2022 the average FTB drawdown was €250,137, almost €20,000 more than the same time last year and the second highest since BPFI started collecting this data in 2003. Similarly, the average mover purchaser reached a new high of €293,817 in the first quarter of the year, almost €17,000 more than a year earlier.

These increases very much reflect the trend in average home price increases which is due to the lack of supply in the market. With nearly 12,100 approvals valued at almost €3.2 billion strong in the first quarter, mortgage lenders are still actively supporting the many customers seeking finance for a new home and there is a healthy pipeline for mortgage drawdowns in the coming months. It is encouraging to note that in the twelve months to March 2022, there were about 35,000 new home commencements, which is a good indicator for future supply.