Mortgage market down ...construction gets lift
Approvals for mortgages in Northern Ireland fell to their lowest level in two years in the first quarter of this year, it's claimed.
E.surv, a firm of chartered surveyors which carries out surveys for three UK lenders operating in Northern Ireland, said the number of mortgage approvals fell "dramatically" in the first quarter of the year.
Approvals fell by more than a quarter from 2,300 in the last three months of 2012 to 1,710, which e.surv said was due to falling demand among borrowers with large deposits.
Richard Sexton, business development director of e.surv chartered surveyors, said the first quarter of the year "marked the first month in two years that the number of approvals fell below 2,000, and was the lowest figure since the first quarter of 2011".
He said: "The drop between quarters was uncharacteristically large. Although house purchase approvals tend to fall between the last quarter and the following first quarter, the 26% fall was significantly higher than expected. In 2011-12 the drop was just 9%. And in 2010-11 the drop was even smaller at 6%."
He said rising living costs were to blame. "The dip was driven primarily by falling demand from wealthier low loan to value borrowers. Punishing inflation and low savings rates dissuaded potential homeowners from taking out new mortgages, as they chose instead to whittle down debts.
"Simultaneously, Northern Ireland experienced the highest rate of unemployment since 1998, with unemployment rising to a high of 8.5%. So, one in 12 people were out of work."
E.surv said its market forecast for house purchase approval figures in the first quarter of 2013 was the most up-to-date and was ahead of data on mortgages from the Council of Mortgage Lenders.
Lending to borrowers with deposits of 15% or below increased "dramatically," e.surv said, and such mortgages accounted for nearly one in five loans in the first quarter. There were 322 such loans, up from 177 in the last quarter. The average 'loan to value' rose to 63.1% from 58.9%, so that fall in demand appeared to be among borrowers with higher deposits.
Earlier this year, the Council of Mortgage Lenders' (CML) in Northern Ireland said 3,600 home loans were advanced to movers last year – the smallest number since 1974.
But in evidence of a two-track housing market, loans to first-time buyers were at their most plentiful for five years.
The CML, which collects mortgage data from most lenders, said there were 5,100 loans to newcomers, up 9% on 2011 and the highest number since 2007.
The data from e.surv is based on house surveys carried out for approved mortgages. A spokeswoman said there had been 414 such approvals in the province during the first quarter, compared to 557 in the final quarter of 2012.
These figures were then 'scaled up' to create a forecast.