New data shows surge in homeowners switching mortgages

New data shows surge in homeowners switching mortgages

For the first time, mortgage approvals exceeded €15bn over the past 12-month period. Picture: iStock

NEW figures from Irish banks show a surge in the level of mortgage switching as homeowners seek out reduced or fixed rates in the face of a series of expected rate hikes.

The Banking & Payments Federation Ireland (BPFI) said 5,544 mortgages were approved in August, a 5.5% increase in July. It was also a 21.3% increase on August 2021.

With the level of house price increases in recent months, the overall value of approved mortgages has also increased. For the first time, mortgage approvals exceeded €15bn over the past 12-month period.

The European Central Bank has raised interest rates twice already this year with plans for two further increases before the end of the year. While yet to do so, the main pillar banks are expected to raise the rates on their loan products which will add significantly to the monthly mortgage repayments. It has resulted in a rush by homeowners to fix their mortgage rates or switch to different lenders to avail of cheaper rates.

The BPFI Figures show that non-purchase mortgage activity, which includes switching and top-ups, grew by 126.5% in volume terms year-on-year. Mortgages approved in August were valued at €1,517m — of which first-time buyers (FTB) accounted for €673m.

Budget welcomed Brian Hayes, Chief Executive of the BPFI welcomed the continuation of the Help-to-Buy Scheme announced in this week’s Budget pointing to the fact that first-time buyers now account for almost 45% of new mortgages.

“Looking at the annualised figures which give us a better overall picture, the figures show there were almost 57,000 mortgages approved in the twelve months ending August 2022, valued at €15.1bn. This was the first time since the data series began that the value of mortgage approvals had exceeded €15bn on an annualised basis. Additionally, FTB approvals reached their highest value since the data series began (almost €7.7bn), while the value of non-purchase mortgage approvals more than doubled since the 12 ending August 2019 to about €3.4bn.”

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