Mortgage approvals for first-time buyers at record high as rates fall
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Mortgage approvals for first-time buyers have hit their highest levels on record in terms of volume and value as interest rates continue their downward trajectory with another meeting of the European Central Bank (ECB) due to take place next week.
Data from the Bank and Payments Federation, Ireland (BPFI) shows that during October there were 4,829 mortgages approved — a 13% increase compared to last year. First-time buyers accounted for 2,981 of those approvals which is a 10.9% increase.
The combined value of all mortgage approvals in October stood at €1.48bn, a 22.1% increase year-on-year. The value of all the first-time buyers' mortgages stood at €930m — a 17.3% rise.
Chief executive of the BPFI, Brian Hayes, said first-time buyer mortgage approvals have “reached their highest year-to-date levels on record for both volumes and values in October 2024”.
“Volumes rose to almost 27,000 during the first 10 months of the year, while the value of first-time buyer approvals exceeded €8.1bn,” he said.
Every category of mortgage saw an increase in approvals during October. Mover-purchaser mortgages increased 11.6% year-on-year to 1,033, while switching activity went up 22.4% to 453.
Top-up mortgages grew 26.9% to 288 while residential investment letting mortgages rose by 17.5% to 74.
This data comes ahead of the next meeting of the ECB on Thursday, December 12, where the Governing Council is set to decide on whether to cut interest rates once more before the end of the year.
The ECB has already cut interest rates three times this year — each by 0.25% — as the European economy struggles with sluggish growth. The decision on whether on another rate cut will be based on the latest available economic data prior to the meeting.
Investors are betting on a steady stream of rate cuts and policy easing at every meeting at least through to next June.
However, the ECB’s chief economist Philip Lane has suggested that the ECB should make future monetary policy decisions based on upcoming risk rather than the latest economic data.
In an interview with the Financial Times, published on Monday, Mr Lane said once the disinflationary process is complete “I think monetary policy needs to be essentially forward-looking, and to be scanning the horizon for what are the new shocks that might lead to less or more inflation pressure”.
He said while the overall inflation rate had fallen close to the ECB’s target of 2%, there was "a little bit of distance to go" and services inflation needed to slow down further.
The latest data from Eurostat shows eurozone inflation accelerated in November to 2.3%, more than October's 2.0% but in line with market expectations and adding to the case for a more cautious interest rate cut next month.
"At some point, we will make the transition from having been driven by [the] very important disinflation challenge to the new challenge of keeping inflation (at) 2% on a sustainable basis," Mr Lane added.