First-time buyer mortgage activity at highest level since 2007

Mortgage drawdowns for first-time buyers (FTBs) rose to its highest level since 2007 last year despite an overall slowdown in mortgage activity, according to a new report by the Banking and Payments Federation Ireland (BPFI).

The number of FTB drawdowns reached a new post-crash peak of 25,591, valued at more than €7.2 billion in 2023, the banking group’s report said.

The BPFI’s report showed the average FTB mortgage rose to €282,084, up from €264,621 a year earlier. “This is the highest level since the data series began in 2003 and the tenth consecutive year in which it increased,” BPFI chief executive Brian Hayes said.

The Government’s Help to Buy scheme combined with the new First Home initiative, which offer first-time purchasers tax rebates and other financial supports to get on the property ladder, have helped fuel greater activity in the new homes market.

Critics, however, have highlighted the inflationary consequences of these schemes.

Despite robust FTB activity, total mortgage drawdowns and approvals declined in 2023 on the back of higher borrowing costs driven by a sequence of 10 European Central Bank interest rate increases.

Annual mortgage drawdown volumes fell by 17.2 per cent to 43,587 while approval volumes fell by 14.4 per cent to 49,898.

Mr Hayes said: “Looking ahead for 2024, we expect housing and mortgage demand to remain strong, notwithstanding the expected slowdown in Irish economic growth.

“We have seen housing output increasing significantly in the past two years and the potential output for 2024 looks encouraging, evident from the commencement activity which reached almost 33,000 units in 2023. Increasing supply should also help average property price inflation ease during the year.”