Is it Getting easier to be approved for a mortgage in Ireland?

The COVID-19 pandemic and subsequent lockdowns have had many effects on business throughout the world and in Ireland. Every industry has been affected by this pandemic, and many in negative ways. However, this is not exactly the case with the mortgage industry in Ireland.

 

The mortgage industry in Ireland has remained remarkably buoyant over the past year. This is especially significant due to the fact that the country has been under level 5 lockdowns since March of 2020. While one would expect mortgage drawdowns and approvals to decrease like most economic activity, what happened instead was surprising. For the first quarter of 2021, BPFI reports that there were 9,091 new mortgages worth €2.1 billion drawn down by borrowers. These numbers represent a 4.5% increase in volume and a 7.3% increase in value when compared to the corresponding quarter of 2020. This was also the most drawdowns approved in Q1 of any year since 2009. 

bpf

March 2021 was also a strong month for mortgage approvals, especially when considering First Time Buyers (FTBs). In March of 2021, a …

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Getting a mortgage during the covid 19 pandemic.

There has been a lot of news about banks not lending to people who are receiving any wage supplements during the covid 19 pandemic. The initial headlines were about AIB who later rowed back on the decision not to assess any cases where people were on wage supports.

The other banks were more open to offering loans but they all have one basic trend in common which is that you can’t be on TWSS and draw down a loan. This may seem unfair but if you got a loan in July and were laid off in August in time a person would wonder ‘why did the bank give that loan?’ given that companies can only get wage supports if their turnover is seriously impacted due to the pandemic. So what can you do?

Delay: for many people they’ll be back to regular wages soon, talk to the people involved in your transaction and see if they are willing to wait. Withdraw: most contracts have ‘subject to mortgage approval’ in them. Ask your employer to take you off the support scheme: …

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An unusual mortgage approval

That banks are lending enough is evidenced in gross lending contraction, that they simply ‘aren’t lending’ is factually incorrect.

We encounter all kinds of strange paths to homeownership with our clients and thought it might be worth showing a recent example which probably never would have made it through without a broker, branch banking typically run a mile from this type of case or don’t spot the angle.

In this instance we had a permanent worker with a child and no savings. This instantly has a few negatives, having children reduces your borrowing capacity and not having savings diminishes any hope left.

With this case in particular though, there were other aspects that swayed it. The client lived with a relative who was selling a property and moving in with a sibling, some of the profits were going to go towards helping our client make a purchase.

A gift alone normally won’t help you get a loan, you have to prove repayment capacity, some lenders will let the whole deposit come from a gift but you still …

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Track that Yield Curve! ECB effects.

Today the FT has reported that the ECB will offer unlimited 12 mth repo facilities to banks, this is a big step for the generally hawkish bank. Note: Unlimited.

We have said on this blog/radio/national papers that the 1% mark is not likely to be passed due to the compression it causes on banking profits (the ZIRP policy was one of the inherent issues with Japan’s lost decade). So the opportunity to get in at what is being touted as the historic low, not to be repeated, will have an effect and the belief – at least in this house – is that it will be on the right hand side of the yield curve.

Undoubtedly banks will now gather every available piece of collateral and cash it in. Remember you heard it hear first: this will cause a problem in about 12 months time when the piper has to be paid and everybody is cashing out/back in …

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