mortgage Archives - Kelly Rahill Accountants

Mortgage holders benefit from – and need – advice, says ESRI

The Economic and Social Research Institute has found that mortgage holders can get a better deal when they read independent advice. 

However, the think tank also found some serious misunderstandings about how mortgages work. 

The ESRI and the Competition and Consumer Protection Commission brought together a sample of 110 people with mortgages and gave them a series of questions.  

They were asked to evaluate mortgage switching offers. They were then stopped halfway through and asked to read the advice on mortgages posted on the CCPC website.  

The experiment found that before reading the advice, some had opted for cashback offers in preference to offers with lower Annual Percentage Rates or APR’s. 

This would have meant higher repayments over time. 

Reading the advice, however, did make some choose the cheaper option of a lower APR. 

The exercise also found that only a third knew that switching mortgages involves paying for a solicitor, while only a quarter knew about the need to pay for a property valuation. 

Three quarters also misunderstood what an interest only mortgage was and one in ten misunderstood their debt liability were they to fall into arrears. 

“There are large gains to be had for many families by switching mortgages, so it is encouraging to see that reading official advice improves consumers’ decision-making and their confidence,”  Dr Shane Timmons, of the ESRI’s Behavioural Research Unit said. 

“Cashback can be useful, but in our experiment consumers placed too much weight on it until they read the advice. Generally, most people are better off securing long-term savings from a lower APR,” he added.

Fergal O’Leary, a member of the Competition and Consumer Protection Commission, said that for most consumers, taking out a mortgage is the largest financial commitment they will make. 

“It is crucial therefore that they fully understand the terms and conditions as well as the full long-term cost of the mortgage they choose,” he said. 

Mr O’Leary said the CCPC commissioned the research to better understand how consumers make decisions in the context of the different special offers and rates available in the mortgage market.

He said the research clearly shows that it is worthwhile to take some time to review the independent information, including the mortgage comparison tool, at ccpc.ie. 

“This is the case for first time buyers but equally so for many consumers who could save on their mortgage by switching. Taking a few minutes to check ccpc.ie can help consumers cut through the advertising material and allow them to get the best deal for their needs,” he added.

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Mortgage approvals up in November; BPFI

Nearly 4,200 mortgages were approved in the month of November, according to figures from the Banking and Payments Federation.

It was down around 7.5% on the approval numbers in October, but up 2% on November of 2018.

In value terms, it amounted to €960 million in November.

That measure was also down month-on-month, but up on the year.

There tends to be a slowdown in the mortgage market as the year comes to an end, but the figures point to continued buoyancy.

First time buyers once again accounted for the bulk of the activity. 

Just over half of the mortgages were issued to this cohort with movers accounting for just over a quarter of the approvals.

There was a fall off in activity among those remortgaging or switching mortgage providers. Approvals in this cohort were down over 11.5% on November of last year and 3% on October.

“While mortgage approvals for November were down on the previous month, this was expected due to the seasonal effect that we typically see in the latter stages of the year,” Brian Hayes, CEO of the Banking and Payments Federation said. 

“Looking at the recent underlying trends, approvals grew both in volume and value terms year-on-year with the First-time buyer segment showing consistent growth and this continues to be a key driver of the market.”

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First-time buyers drive demand for mortgage approvals

New figures from Banking & Payments Federation Ireland show strong growth in mortgage approvals figures for October, driven by demand from first-time buyers.

The BPFI figures show that a total of 4,514 mortgages were approved in October . Of these 51.6% were for first-time buyers while mover purchasers accounted for 27%.

BPFI also said that the number of mortgages approved in October rose by 18% month-on-month and by 5.9% year-on-year.

Mortgages approved in October were valued at €1.020 billion. First time buyers accounted for €547m of this, while  €308m were accounted for by mover purchasers.

The value of mortgage approvals rose by 22.5% on a monthly basis and by 9.7% on an annual basis. 

Meanwhile, re-mortgage and or switching approvals rose by 17.1% in volume on the previous month and fell by 1.5% year on year.

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New rules agreed for distressed mortgage holders

An agreement on how to resolve disputes between lenders and distressed mortgage holders has been reached between two leading agencies.

MABS, the State-backed Money Advice and Budgeting Service and the Banking and Payments Federation have announced the agreement, saying it will help consumers who are struggling with mortgage debt.

The agreement extends to so-called vulture funds, which have been the subject of much controversy for how they handle home repossessions.

They are openly referred to as vulture funds, but in banking circles they are officially called Credit Servicing Firms, and are now subject to regulatory oversight by the Central Bank.

The funds buy distressed mortgages off the banks, at a knockdown price, in the hope of selling on at a profit.

That can often lead to people being evicted, and the vulture funds have been roundly criticised for being heavy handed and unsympathetic to struggling families.

The agreement applies to borrowers who have already been through the Central Bank Mortgage Arrears Resolution process without success and are entering the legal process.

It sets out rules of engagement between funds and MABS, when they are representing mortgage holders.

Given the unease over relations between both sides in recent years, it is a first step in trying to resolve difficult issues, by providing some fairness for borrowers.

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Mortgage approvals see annual rise of 4.1% in August

Mortgage approvals see annual rise of 4.1% in August

New figures show that the number of mortgages approved rose by 4.1% in August on an annual basis, while they fell by 15.1% compared to July.

The Banking & Payments Federation Ireland, which is urging an extension of the Help to Buy scheme in next month’s Budget, said a total of 4,355 mortgages were approved in August.

Over 51% of these mortgages were for first-time buyers while mover purchasers accounted for 27.9%, the BPFI figures show.

Mortgages approved in August were valued at €968m. First time buyers accounted for €500m (51.7%) of these mortgage approvals, while mover buyers made up €309m (31.9%) of the total.

The BPFI said the value of mortgage approvals rose by 4% year-on-year in August, while they fell by 16.7% month-on-month.

Meanwhile, re-mortgage or switching approvals fell in volume by 8.7% on the previous month and by 14.9% year on year in August.

Brian Hayes, BPFI’s chief executive, said there was significant volatility in monthly mortgage approvals figures over the summer months.

“July may have been an outlier but the latest approval figures indicate continued year-on-year growth in mortgage lending in overall terms,” Mr Hayes said.

He noted that the Help to Buy scheme has been a key support for first time buyers, with an estimated nine out of ten FTBs using the scheme.

“To avoid a slowdown in housebuilding, we strongly recommend that the scheme be extended in the Budget for a clearly defined period to provide the certainty that is needed going forward,” he added.

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Mortgage approvals rise by 10% in May year on year

Mortgage approvals rise by 10% in May year on year

Almost 5,000 mortgages to the value of over €1.1 billion were approved in May, the latest figures from Banking and Payments Federation Ireland show.

Over 51% of these were for first-time buyers while mover purchasers accounted for 26.3%.

Today’s figures show that the volume of approvals rose by almost 20% month-on-month and by 10% year-on-year.

Meanwhile, the value of mortgage approvals rose by 22.1% month-on-month and by 12.1% year-on-year.

The BPFI also said that re-mortgage/switching approvals rose on a year-on-year basis by 7.5% in volume and by 5.1% in value terms.

Felix O’Regan, Director of Public Affairs at the BPFI, said that mortgage approvals in May showed a significant increase in both volume and value compared to the previous month as well as the previous year.

“In line with the broad pattern over recent months this uplift in activity is very evident in the first-time buyer segment of the market, which continues to account for just over half of all mortgage approvals,” he said.

“All in all, these approval figures point to a good pipeline of mortgage drawdown activity,” he added.

Conall Mac Coille, chief economist with Davy, said the market was bouncing back after some weakness earlier in the year as fears around Brexit put people off going into the housing market.

“We’ve seen a rebound in residential transactions coming into the summer months. The other issue is that last year we saw a squeeze on people who could get an exemption above 3.5 times income. If we look at first time buyer average approval at the moment, at €238,000 it’s up 5% on last year”, Mr Mac Coille said.

“It looks like some of that squeeze that we saw in the market last year is going away. The banks don’t need to squeeze lending because of the changes in the rules 18 months ago. People are being approved for higher levels of mortgage debt and in time that will breed higher inflation,” the economist added.

He said suggestions that uncertainty around the future of the help to buy scheme was contributing to a slowdown in house building had yet to feed through to the figures.

“Completions in the first quarter were up. Commencements are up to about 23,000 in the 12 months to April. We’re not seeing any slowdown in the data on home building. We’re still at depressed levels and it’s picking up.”

In terms of the help to buy scheme, Conall Mac Coille said once such programmes are implemented, they’re hard to take away without resulting in politically difficult decisions.

“It would cause a bit of disruption and dislocation in the market. If a builder bought land expecting to achieve a particular price for the homes he’s going to sell, he would have to cut that back,” he stated.

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Mortgage approvals rise by 9.5% in April – BPFI

Mortgage approvals rise by 9.5% in April – BPFI

New figures from the Banking and Payments Federation Ireland show that just over 4,100 mortgages were approved in April.

This is down slightly month on month, but up 9.5% on an annual basis.

The figures show that just over half of those mortgages went to first time buyers – with movers making up a little over a quarter of the figure.

But the number of mortgages given to investors – for buy-to-let properties – fell in the month, and is down almost 30% year on year.

Meanwhile, the value of the loans being given out by banks continues to rise.

Approvals in April were worth a total of €931m with more than half of that total going to first time buyers.

The value of approvals is up 1.1% in the month and more than 10% year on year.

Felix O’Regan, Director of Public Affairs at Banking and Payments Federation Ireland, said the latest figures show good year-on-year growth of 9.5% and 10.5% in the number and value respectively of mortgages approved by lenders during April 2019.

“This growth is particularly evident in the case of first-time buyers where the 23.2% uplift in the value of approvals in April 2019 compared to April 2018 represents the strongest rate of growth since October 2017,” Mr O’Regan said.

He said that while the comparison of the April figures with March shows weaker growth, and even a decline in some categories, the year-on-year comparison provides a more reliable picture of the overall mortgage market performance because of the volatility that can arise from one month to another.

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Mortgage approvals soar but would-be buyers wait on supply

Mortgage approvals soar but would-be buyers wait on supply

NEW figures show the scale of pent-up demand among would-be home buyers with approvals running well ahead of mortgage drawdowns.

Figures from the Banking and Payments Federation, which represents lenders, show that 8,577 new mortgages to the value of €1.884bn were drawn down by borrowers during the first quarter of 2019.

First-time buyers remain the main driver of mortgage lending in the first three months of this year, accounting for 47.3pc of all loans drawn down and 47.9pc of the value of borrowing.

Separate figures show there were 4,142 mortgages approved in March, more than half for first-time buyers.

Approval are up 22.8pc compared to March last year. The number of mortgage approvals has raced ahead of drawdowns in recent years as first time buyers in particular have struggled to find homes to buy amid tight supply and constrained lending rules.

The figures also show a rose in the number of re-mortgages and mortgage switching approvals, a trend pushed by regulators keen for consumers to avail of potentially lower costs.

“The number and value of mortgages actually drawn down by borrowers during Q1 2019 show good growth on corresponding 2018 activity,” BPFI’s director of Public Affairs, Felix O’Regan, said.

“This reflects the appropriate response by lenders to increased demand for mortgage finance. Furthermore, the uplift in the number and value of mortgages approved in March indicates that further growth in drawdown activity can be expected,” he added.

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Increase in value and volume of mortgages drawn down

Increase in value and volume of mortgages drawn down

There was an 8.9% increase in the number of mortgages drawn down in Ireland in the first quarter of this year, according to the body representing the banking, payments and fintech sectors.

Figures published by the Banking & Payments Federation Ireland show 8,577 new mortgages, to the value of almost €1.9bn, were drawn down during the first three months of 2019.

It represents an 8.9% increase in volume and a 10.6% increase in value compared to the first quarter of last year.

While it represents a decrease on the final quarter of 2018, BPFI say traditionally Q1 is the weakest quarter in any year and Q4 is the strongest.

First-time buyers remain the single largest segment by volume (47.3%) and by value (47.9%).

BPFI has also published figures showing the latest rate of mortgage approvals, with 4,142 approved in March of this year.

2,114 of these – 51% of the total – were first-time buyers.

The number of mortgages approved rose by 22.8% year-on-year and by 23.1% month-on-month.

Mortgages approved in March 2019 were valued at €920m – of which FTBs accounted for €473m (51.4%) and €266 million by mover purchasers (28.9%).

The value of mortgage approvals rose by 20.7% year-on-year and by 21.6% month-on-month.

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Significant increase in the number of new mortgages approved in Febraury

Significant increase in the number of new mortgages approved in Febraury

New figures show there was a significant increase in the number of new mortgages approved by banks in Ireland last month.

According to the data from the Banking and Payments Federation of Ireland, the number of mortgages given the green light during the month rose 7.2% compared to the same month a year earlier.

An increase of 10.8% in the number of approvals was recorded compared to January of this year.

In total, home loans worth €757m were given the go-ahead during February, up nearly 13% compared to January and almost 10% versus a year earlier.

First-time buyers accounted for a little over half that amount with mover purchasers making up nearly a third of the total value.

The data also shows that re-mortgage and switching approvals rose on a year-on-year basis by 1.8% in volume and by 4.3% in value terms.

There were 45,775 mortgages approved in total over the 12 months to the end of February and those loans were valued at €10.175bn.

Despite the strong month, across the year total annualised mortgage approval activity only increased in volume by 0.50% and by 0.66% when it come to value.

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