Mortgage lending activity in Ireland to first-time buyers, second-time buyers and buy-to-let investors for all of 2023 reached almost 36,000 units. That is roughly the same number as in 2022, 2021, 2019, and 2018. 2020 was the exception which was largely due to the pandemic. In other words, for the better part of a decade, the total number of mortgages to these three groups has been stagnant, it is in a big rut.
To put this into perspective, this is about the same number of mortgages originated back in 1988, to the same three groups. Of course, that was a different Ireland with about 1,500,000 fewer people living here and where average family size was far higher.
In terms of the overall lending landscape here in Ireland, there has been a massive decline in the number of banks operating here. The exit of Ulster Bank and KBC in 2023 was preceded by Bank of Scotland and Dansk Bank some years previously. So, in this respect, it is easy to see a correlation between declining banks available to lend, declining lending activity and declining opportunities for borrowers to borrow. It could be argued that banks today have a more select market to choose from, it’s a lenders market. It’s a market for anyone with the best incomes, best credit scores and best repayment prospects.
Of course, mortgage lending is a function of available properties to buy. These have been in short supply as everybody knows. But the other variables, especially lending volume and capacity is a concern. What happens if supply issues are resolved? Will the remaining banks be able to increase lending capacity, at volume and in short order? Without a big drive to hire and train underwriters (or invest in software that can auto-approve), this will remain a big chokepoint. And it is not just the banks. Solicitors and especially the Registry of Deeds / Title services should be overhauled to increase lending efficiency. As it stands, they can often be more of a bloc on lending activity.
Buying a home remains a pillar of financial wellbeing. Without this option, future financial resilience is at stake for tens of thousands of people. The role of Government now needs to be to examine what it can do to ensure equal opportunities for all. Whether it’s a form of a state bank with lending powers or the reform of the lending system to ensure greater efficiencies in title deeds registration etc, it should be doing so to promote the public good.
Frank Conway is a Qualified Financial Advisor and author of Ireland’s Essential Guide to Personal Finance. He is actively involved in the promotion of financial wellbeing in the workplace and financial literacy in secondary schools across Ireland.