Latest statistics released by the Irish Banking Federation show a significant increase in mortgage lending during Q4, 2012.
On year-on-year basis, there was a 27% rise in lending during 2012 compared to 2011 for the purpose of a home purchase (this excludes top-up loans and switcher mortgages).
The number of loans granted for a home purchase in 2012 represents the first increase in lending since 2006.
Lending to first time buyers rose 80% in the fourth quarter when compared to the previous quarter.
The sharp rise in lending to first time buyers in the last quarter of 2012 is probably in large part due to the scrapping of mortgage interest relief at the end of the year.
Lending to second time buyers also rose in the fourth quarter, where there was a rise of almost 28% compared to the preceding quarter.
Interestingly, the level of lending in 2012 mirrors almost exactly figures from 40 years earlier. In 1972, a total of 14,168 were granted for the purpose of a property purchase, in 2012, the figure is 14,160, a difference of only 8 loans.
Lending to investors is all but non-existent. During all of 2012, a total of 591 investment property mortgages were granted. This represents a drop of 98% since the peak of the mortgage market in 2006, when almost 26,000 mortgages were granted for investment property loans.
The 5-year decline in mortgage lending has finally ended. Lenders are slowly beginning to lend again. The primary mortgage market is to first time buyers followed by existing homeowners.
Mortgages for investment properties, equity release and those switching from one lender to another continue to done on a very marginal basis.
It is likely that mortgage lenders will focus their attention on the two primary markets for some time; first time buyers and existing homeowners.