Mortgage holders are switching providers in an attempt to save money as interest rates rise amid the current cost-of-living squeeze.
Figures from the Banking & Payments Federation Ireland (BPFI) show a total of 5,255 mortgages were approved last month with first-time buyers accounting for 45 per cent of this number. The total was down nearly 12 per cent on the previous month but was up 4.4 per cent on the same period last year.
In value terms, the mortgages approved in July were worth €1.4 billion, down nearly 13 per cent on the previous month.
Much of the activity in July was driven by non-purchase mortgage activity, which includes switching and top-ups. This category grew by 95.8 per cent in volume terms year-on-year to 1,741, and by 147.6 per cent year-on-year in value to €441 million.
However, a sequence of interest rate hikes planned by the European Central Bank is expected to dampen demand in the coming months.
The ECB surprised investors last month with a 50-basis-point rate increase on the back of fears that inflation was becoming entrenched in the euro zone economy. With headline data pointing to a further increase in core inflation, another rate hike in September is seen as a done deal.
“Our latest mortgage data is showing continued growth in mortgage activity which is being driven mainly by non-purchase mortgages – primarily those who are remortgaging or switching,” BPFI chief executive Brian Hayes said.
“Looking at the annualised figures which allows us to more accurately assess emerging key trends, there were 55,689 mortgage approvals in the 12 months ending July 2022, valued at €14,753 million. This represented a volume increase of 0.40 per cent and a value increase 1.17 per cent of compared with the twelve months ending June 2022.”
“Non-purchase mortgage activity, most of which is switching, has increased sharply since May, reflecting both the competition in the market and the fact that mortgage customers continue to shop around for better rates,” he said.
“We welcome the fact that mortgage customers are actively taking steps to minimise the impact of the ECB’s planned interest rate increases, whether they switch to another mortgage lender or renegotiate with their current lender.”