Figures from the main banks show that a decline in switching led to an overall drop in mortgage activity last year, despite a jump in the number of approvals for first-time buyers (FTBs).

Almost 30,500 FTB mortgages, valued at more than €8.8 billion, were approved in 2023, according to Banking Payments Federation Ireland (BPFI). This represented increases of 8.9% and 15.9% in volume and value terms, respectively, compared with 2022.

Overall, however, annual mortgage-drawdown volumes fell by 17.2% to 43,587, while approval volumes fell by 14.4% to 49,898.

This drop was mainly due to a 63.5% decline in switching activity, which had more than doubled in 2022 as interest rates rose.

December dip

BPFI also said that banks approved 2,793 mortgages during December – just over 60% were for FTBs. Mover purchasers accounted for 23% of the market.

The December approvals figure fell by almost 23% compared with a year earlier, and by 33.5% from November’s figure.

Mortgages approved in December were valued at just under €800 million – down almost 20% compared with a year earlier, and almost 34% lower than in November.

FTBs accounted for almost 61% of the total value of December mortgages approved.

Year-on-year, re-mortgaging or switching activity fell by almost 69% in volume terms, and by almost 72% in value.

FTBs dominant

The BPFI also released figures on mortgage drawdowns for the final three months of last year that showed similar trends to the recent monthly figures.

A total of 11,584 new mortgages to the value of almost €3.3 billion were drawn down by borrowers during the fourth quarter of 2023. This represented a decrease of 27% in volume and 24% in value compared with the same quarter of 2022.

Brian Hayes (chief executive, BPFI) said that FTBs had dominated the mortgage market in recent months, amid an overall slowdown in both drawdown and approval activity.

“The number of FTB drawdowns reached a new peak at almost 26,000, valued at over €7.2 billion, in 2023 – the highest annual levels since 2007,” he stated.

The average FTB mortgage drawdown increased to €282,084 – up from €264,621 a year earlier. Hayes said that this was the highest level since the data series began in 2003, and the tenth consecutive year in which it increased.

Supply signs ‘encouraging’

BPFI expects housing and mortgage demand to remain strong in 2024, notwithstanding an expected slowdown in Irish economic growth, according to Hayes.

“We have seen housing output increasing significantly in the past two years, and the potential output for 2024 looks encouraging,” he added.

“Increasing supply should also help average property-price inflation ease during the year,” Hayes concluded.