Surge in mortgage approvals shows improvements for property market

There was some more good news for the property market as the amount of mortgage approvals this June saw an increase of nearly 9% on last June’s figuremortgage-approval

Just over 1,600 mortgage loans with a value of €280 million were approved in June – an 8.8% increase on the amount of approvals for the same month last year which shows that the confidence of the banks to lend is gradually improving. This figure should not be confused with the amount of people who actually availed of the loan offer for which figures have not yet been released.

Data relating to mortgage activity is analysed and regularly released by the Irish Banking Federation. The increase in approvals comes at a time when property prices across the country recorded their first annual increase of 1.2% – the first such rise since the end of the ‘boom’ in 2008. But while more and more people are getting approved, the average loan amount has gone down.

The average mortgage sum given to successful applicants last month stood at €174,675 – 2.6% lower than the average amount drawn down 12 months ago. Those looking to remortgage to reduced monthly repayments or get a top-up for home improvements were more likely to be disappointed. The success rate for a remortgage or loan top-up went down nearly 8% but the average value of such loan went up beyond the €100,000.

Increase in mortgage approvals showing activity in housing market

Mortgage approvals in November 2012 up 38% on previous years

Mortgage experts have welcomed a recent jump in the number of mortgages being approved by Irish institutions and may suggest the first steps in a property market recovery. The most recent figures from the Irish Banking Federation (IBF) relating to activity in November 2012 showed that just over 2,000 loans were approved – a 38% increase from the same month in 2011.

2012 has been a buoyant year for people taking the plunge and buying property. The number of mortgages offered during the January 2012 – November 2012 period went up by 12% to over 16,340. While the increase in mortgage applications was helped by the Government’s Mortgage Interest Relief scheme, many of those approved for mortgages in November would not have completed the mortgage process in time to beat the 31st December deadline.

Indeed, there seems to be demand for mortgages. Permanent TSB have announced they are to allocate €350 million this year for mortgage lending – a sign that PTSB have confidence in the market going forward. Despite the recent pick-up in loan approvals, ratings agency Fitch is predicting a further 20 percent drop in property prices this year. Even so, experts are confident of continued rises in mortgage approvals, especially among first time buyers.

Increase in mortgage approvals in October than previous year

October’s mortgage data shows increase in loan approvalsmortgage-approval

The number of mortgages approved by banks during October went up by around 27 percent when compared to the same month last year. Lenders participating in an Irish Banking Federation (IBF) survey approved 1,677 loans for the calendar month of October. This figure represents a 26.9% improvement on the rate of approvals recorded in October 2011 as well as a rise of just over 10% in the amount of mortgages approved this September.

Data was complied from nine lenders who participated in the IBF survey: AIB, Bank of Ireland, EBS, Haven, ICS Building Society,Ulster Bank, Permanent TSB, KBC and Danske Bank. However, it is important to note that the IBF classified an approval as an offer made to an applicant to avail of sufficient credit to purchase their desired property and does not necessary assume that the loan sum had been drawn down.

To put simply, this means that an applicant could have been successful in their loan application but chose not go ahead with drawing down the money. More good news relating to mortgage activity earlier releases showed a first annualized increase in the number of mortgages being drawn down since the boom’s peak in 2006. While this recent performance is encouraging, there is doubt that growth can be sustained in 2013 and beyond.

Given that the interest relief scheme for first time buyers is due to be abolished at the end of 2012, there is no way to see the effect its absence will have on the demand for people to seek mortgage approval.

Need help on how to get mortgage approval?


We give an insight into how to go about getting approval for a mortgage loan

If we go back to an age not so long ago, seeking mortgage approval was, for many, quite a smooth process. How times have changed. Given the downturn of the property market and the banking crisis that ensued from it, lenders nowadays have become stricter with whom they approve for a loan. Borrowers must be prepared to undergo having their finances thoroughly examined by a lending institution before any loan being issued.

It is, therefore, vital for anyone to have their finances well prepared before applying for a mortgage. While the number of mortgages being approved has dropped, that does not mean that you should be scared off the application process. So, as experts with over 15 years experience behind us, we have decided to give some tips that we feel are key in order to be successful.

First of all, we suggest compiling all relevant documents that you must furnish to a bank.

Typically needed for an application are the following: bank statements going back 6 months, a recent utilities bill (gas, ESB etc.), your P60 for the last 2 years, 3 most recent wage slips, current statements on any outstanding loans, and proof that you have savings. This may sound like a lot, but all the above will be needed so that the lender can assess you eligibility for approval. If you are having difficulties getting everything together, our advisors will be glad to help you.

Another point to consider is keeping up on your current loan repayments.

If you are seen to be struggling with other debts during assessment, it is very likely you will not be successful. Any potential lender will have concerns about giving out a home loan to someone who has missed repayments on loans that are generally smaller than a mortgage. Bank statements showing overdrafts will also hamper your chances. It is ideal not to have any outstanding loans with a healthy current account. However, if you have a car or personal loan, make sure any repayments are being paid in full on time.

In addition to your current account, you need to demonstrate you can save too!

With the era of the 100% mortgage long gone, people buying a home need to provide clear evidence of being able to save. This requires putting aside a portion of your earnings each month and goes a long way to impressing a lender that you are capable of being able to deal with the added cost involved in servicing repayments. So, how much must you need to save then? Well, considering the most a bank will give to someone is 92% of the purchase price, you will need to have at least savings adding up to the remaining 8 per cent.

Saving is important, but having permanent secure employment is even more so.

Given Ireland’s sluggish employment figures and ever increasing dole queues, lenders need to see that your job is safe and that you have a permanent contract with at least one year’s service (as would be evidenced by your P60) behind you. Not only this, but the type of employment has also come under scrutiny as certain industries that are struggling would be seen as a bigger risk.

If this sounds daunting, don’t worry. Get in touch with Mortgage Advice today to speak with one of our advisors who will be more than glad to help you through how to go about making a successful loan application.

One in three failed to get mortgage approval in 2011

38% of mortgage applicants were unsuccessful in getting approval in 2011how-to-get-mortgage-approval-ireland

Over one third of applicants who sought mortgage approval in 2011 were turned down. This was the key message from a letter from the Minister of Finance, Michael Noonan, addressed to the Finance spokesperson for Fianna Fáil, Michael McGrath. It outlines that there were in excess of 28,500 applications made to Irish banks by those seeking a loan to purchase a home in 2011.

Out of all these applications, only 17,700 of them were approved by the State’s major lending institutions. The banks which data was compiled from were Allied Irish Bank and Bank of Ireland and Permanent TSB. This equates to more than a third, or 38%, of home loan applications were rejected by the above banks. However, the rate of refusal may not be fully accurate as information from EBS Building Society have not been included in the original figure.

Therefore, it is likely that the rate of unsuccessful applications is higher than the 38% initially quoted in the document. Discussing the letter he received on the national chat show Morning Ireland, Mr. McGrath said that these findings do little to inspire confidence in reviving the ailing property market especially in a period when the Government is offering incentives such as the Mortgage Interest Relief in order to get the property sector back to a healthy state.