Mortgage approvals for first-time buyers reach new highs despite rising interest rates

First-time home buyers are continuing to buck the trend as mortgage approvals reached their highest level in more than a decade despite increasing interest rates.

New data show home loan approvals for first-time buyers surpassed the €8 billion mark for the first time since 2011 in the year to May 2023.

Figures from the Banking and Payments Federation for May show 4,928 mortgages were approved, with an overall value of close to €1.4 billion.

Some 3,170 mortgages were approved for first-time buyers in May, up 20 per cent on the same month last year and up 31.2 per cent month-on-month.

BPFI chief executive Brian Hayes said May was the busiest ever for such mortgage approvals in terms of both volume and value.

While first-time buyers are normally the largest cohort active in the market, Trevor Grant, chairman of the Association of Irish Mortgage Advisors, said the “resilience” of the economy and a shortage of properties for rent were forcing more people to try to climb onto the ladder.

“There’s a lot of people in very good jobs earning well and there’s a severe lack of rental property,” Mr Grant said.

“First-time buyers are still largely qualifying even on the higher rates and for a lot of them, even at 3 per cent [interest] or 4 per cent, is still cheaper than the rent they’re paying,” he added.