By Frank Conway
The mortgage market in Ireland today is experiencing about the same level of activity as it did in 1988.
And since 2018, the overall number of units transacted for first time buyers, second-time buyers and property investors has barely moved beyond the mid-30,000 level.
According to the Banking & Payments Federation of Ireland, which takes a lead role in publishing mortgage drawdown figures, there are five mortgage categories. First-time buyers, second-time buyers, investors, refinance and top-up.
In the interest of fairness, to accurately track mortgage activity since records began in 1970, I have only used the first three mortgage categories for comparison purposes.
Mortgage lending through the years.
Mortgage lending surged in the years leading up to 2006, where 111,000 units were drawn down across the three main categories. But following the economic crash, where lending collapsed by 90%, it has struggled to regain any significant momentum.
But what is even more interesting is the level of mortgage activity per head of population. In 1988, when there were just under 3.5 million people living in the country, there was 1 mortgage for every 94.7 residents.
Fast forward to 2024, and the number has reduced significantly to 1 mortgage for every 147.7 residents.
Other factors that come into play. The exodus of international banking from Ireland, including Ulster Bank, KBC Bank and Bank of Scotland (Ireland) have played a part. The reduction in housing delivery has also been a major factor. And despite the recent launch of Government plans to boost housing delivery in the years ahead, concerns raised by those directly involved in the construction industry point to the challenges. Those include limited capacity to expand the number of skilled workers to deliver housing, limited accommodation and cost of living in Ireland compared to other countries.
Mortgage lending is a beacon for financial wellbeing
Mortgage lending serves as a beacon into how residents are building financial security. In general, there are four primary financial wellbeing pillars where security of tenure is a major one. The ability of someone to buy a home and build long-term financial security is key to their long-term financial wellbeing. Others include security of employment, protection and retirement income.
Credit Unions step into the void
Recently, credit unions have begun to fill some of the market void. Many of the main credit unions now offer mortgages to their members. Those include mortgages for first-time buyers, second time buyers and those switching for a better rate of interest. Loans of up to €500,000 are on offer at competitive interest rates.
Frank Conway is a Qualified Financial Advisor and founder of MoneyWhizz.
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