Surprise - Mortgage Lending is Down

This week, the Irish Bankers Federation published their Mortgage Market Profile. Unsuprisingly, the Irish mortgage market continues to contract. In my opinion there are two main reasons for this - (1) people are still deferring property-buying decisions due to fear / uncertainty / possibility of further price drops and (2) lending criteria has tightened so much that it's a lot harder to get approved for a mortgage than it was previously.

Here's an extract from the Press Release...

• 3,259 new mortgages issued in Q1 2011 to a value of €577 million
• Home purchasers continue to dominate the market


The IBF/PwC Mortgage Market Profile published today shows that 3,259 new mortgages to the value of €577 million were issued during the first quarter of 2011.

The volume of new lending is down 42% compared to the previous quarter and is down 53.1% on the previous year. While the seasonal pattern of mortgage lending typically results in a lower level of lending in the first three months of the year compared to other quarters, this more pronounced reduction in activity reflects the broader macroeconomic environment.

However, the key home purchaser segments of the market, First Time Buyers and Mover Purchasers, continue to dominate this smaller market. Together they now account for over 77% of the market by value and 67% by volume. In effect, more than three-quarters of all mortgage credit issued now goes to the home purchasing segments of the market.

Lenders generally continue to report subdued underlying demand for new mortgage finance. This has been influenced by uncertainty around macroeconomic developments, property price trends and future interest rate movements. At the same time, lenders continue to point to the need for prudent lending with the all-important focus on the borrower’s employment situation and capacity to repay.

Guide to Dealing with Mortgage Repayment Difficulties

The Irish Bankers' Federation have published a guide containing some basic advice on what to do and what not to do if you experience difficulty meeting your mortgage repayments.

It can be downloaded from their website here.

There may possibly be comments about the irony of the IBF publishing such a guide when it could be argued that practices of some of their members may have contributed to some people's current difficulties, but we are where we are. It's a useful guide nonetheless.

Irish Nationwide - Burgess was right

It was heartening to hear Brendan Burgess receiving repeated applause when speaking at the Irish Nationwide AGM yesterday. Brendan had been a long-time critic of many Irish Nationwide policies and of its former Chief Executive, Michael Fingleton. I had attended two previous AGMs where he was heckled for speaking out while Mr. Fingleton was praised for bringing in profits to the society. Now that we all have seen the costs of these profits and the unacceptable risks taken to achieve them, at least the members have accepted that Brendan Burgess and his fellow dissident member, Shane Hogan, were right to criticise the board. It's only a shame that they weren't listened to before the society was brought to the brink of destruction by the actions of their board and former chief.

It's not as publicly known, but Messrs Burgess and Hogan also forced Irish Nationwide to drastically improve their treatment of borrowers in arrears and many Irish Nationwide borrowers may have avoided repossession because of this work, whether they realise it or not.

Related links: -

RTE News

Irish Independent

Irish Times