The number of mortgages granted for the purchase of property in the first 6 months of 2012 is now lower than was the case for the first six-month period in 2011 and could fall to their lowest level since 1971 if current trends continue.
Based on the figures published by the Irish Banking Federation, a total of 5,855 mortgages were granted during the first half of 2012. This is 14% fewer mortgages than the same period in 2011, where 6,810 mortgages were drawn down.
Equally, when refinance and top-up mortgages are eliminated from the overall figures (since these loans are not actually used to purchase property), a total of 5,050 mortgages were granted in the first 6 for the purpose of buying a property. These loans were given to first time buyers, existing homeowners and those buying investment properties.
If current trends continue, this would result in little over 10,000 mortgages being granted to purchase a property.
First time buyers, existing homeowners and investors are the three segments which the Department of the Environment has tracked mortgage origination since 1970.
If the numbers hold out on their current path, it would result in the lowest number of mortgages being drawn down than at any point since 1971.
Following are the lending statistics for origination 1970 – 2012 (projected)
|Year||Mortgage Units||Data Source|
Italy has seen the number of cash-for-gold shops multiply significantly in recent years as citizens there are forced to sell jewellery to pay bills.
According to media reports, the Eurispes think-tank estimates that the number of gold-buying shops has quadrupled in the last two years.
As has been happening in Ireland and other countries, citizens in Italy are finding the ongoing austerity programmes is resulting in less and less money to pay basis bills. Buying gold has become one of the boom industries.
It is estimated that there is an estimated 28,000 “cash for gold” outlets in Italy, according to Gianni Mancuso, one of six centre-right MPs who last month presented a request in parliament for the government to regulate the sector more strictly.
As with many growth sectors, the Government in Italy is now looking at how it will regulate the industry there…a codeword for how it plans to generate additional tax.
Tesco Bank, part of the retailing giant that carries the same name has announced that it is to begin offering mortgages for the first time in the UK. Its foray into the mortgage world is likely to be as timid as an injured athlete returning to training for the first time. Conservative lending will be the order of the day.
The bank, which said it aimed to offer products for the “majority” of its supermarket customers is not going to be offering any mortgages to those with deposits less than 20%, in other words, 80% maximum loan-to-values. This will rule out much of the first time buyer market, where lower deposits tend to be the norm.
“This is a prudent place to start,” said David McCreadie, managing director of Tesco Bank. He acknowledged that Tesco bank currently had no plans to offer mortgages to first-time buyers with smaller deposits, even though he expressed confidence that Tesco Bank is planning a full service that would rival high street banks.
The range of mortgages include two-year, three-year and five-year fixed rates. Mortgage experts in the UK have questioned the Tesco Bank offers and claim they are so uncompetitive, it is unlikely that many consumers would ever end up taking the Tesco Bank loans out.
The entry of Tesco Bank into hard-core lending is likely to continue to be done on a step-by-step basis as the grocery giant learns the complexities and dangers associated with lending. However, it’s entry into the mortgage market should be an interesting exercise that is likely to closely watched by similar operators such as Sainsburys, who also promote their own ‘bank’ services.
Here in Ireland, it is probably safe to say that we are stuck with banks that we already have. With just two lenders, AIB and Bank of Ireland doing minimal levels of lending, other banks continue to lick their wounds on the banking sidelines. A return to mortgage lending is a while away, even if the property market begins to stage a meaningful recovery.