Belfast Telegraph

Northern Ireland first-time mortgage levels last year highest since 2004

Recovery: Richard Ramsey
Recovery: Richard Ramsey
Ryan McAleer

By Ryan McAleer

First-time borrowing has hit a 14-year high in the Northern Ireland mortgage market, new figures show.

There were 10,500 new first-time buyer mortgages completed here last year, according to UK Finance, 9.4% more than 2017. It's the highest figure since the 10,600 recorded in 2004.

UK Finance represents more than 250 firms in the banking and finance sector.

Its latest report found 2,900 new first-time mortgages were completed here in the last three months of 2018, 11% more than the same quarter in 2017.

UK Finance's data showed that while the number of mortgages granted for people moving home in 2018 was the highest since 2007, the 6,600 figure was still well below the peak housing boom number of 12,700.

There were 9,500 homeowner remortgages last year, 11.8% more than 2017 and the highest since the 10,100 recorded in 2009.

Ulster Bank's chief economist Richard Ramsey said the local mortgage market had experienced a notable recovery since 2008, but he described it as "a two-speed recovery".

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He contrasted the "impressive" rebound in the first-time buyer (FTB) market with the "lacklustre" home-mover market.

"Over the last decade FTB activity has soared by 262% as compared with 35% for the home-mover market," he said.

"Since 2011 the FTB has overtaken the home-mover segment as the dominant part of the mortgage market. The sector now accounts for 61% of loans advanced for property purchase, a 17-year high."

The economist said a legacy of negative equity and low levels of equity were acting as "a handbrake" on the home-mover market, with home improvements taking precedence over moving house.

He continued: "First-time buyers are benefiting from historically low mortgage costs and don't face the intense competition from investors that thwarted their entry onto the property ladder in the mid-2000s."

He also pointed to changes in tax arrangements in the buy-to-let and second-home market alongside higher levels of stamp duty.

"However, rising house prices require bigger mortgages, with the average mortgage for a first-time buyer jumping from £70,000 in 2013 to £100,000 in 2018," he said.

"Against the background of strong rental inflation, saving for a deposit has been increasingly challenging for many.

"It is noted that the average deposit put down by first-time buyers in 2018 was £15,000. Clearly accessing funds from the 'bank of mum and dad' is a key determinate on whether or not an individual can gain a foothold on the first rung of the property ladder."

Patrick Mullan, head of mortgages at Danske Bank, said the survey reflected a growing housing market here.

"Northern Ireland is still the UK's most affordable region and with house prices expected to rise at a steady rate of between 4% and 5% annually, we believe there is capacity for further sustainable growth in 2019."

And Jackie Bennett, the director of mortgages at UK Finance, said: "The Northern Ireland mortgage market saw the strongest performance of any UK region in 2018, with sustained growth across all sectors.

"First-time buyer mortgages reached a 14-year high, as borrowers took advantage of what remains the UK's most affordable housing market."

Belfast Telegraph