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Mortgages - Ireland - March 2013

Published By :

Mintel

Published Date : Mar 2013

Category :

Banking

No. of Pages : 124 Pages


Although the Irish mortgage market has been hit hard by the events of recent years, there are signs that the market is beginning to show some more positive signs of activity though nothing like the level reached during the economic boom years. This is due primarily to the growing sense that property prices have finally bottomed out. 

Nonetheless, lending criteria remain considerably tighter than in the pre-crisis years, while the tolerance for risk is low (and will almost certainly remain so for many years to come, at least). As a result, lending remains subdued and significant downside risks (such as high levels of unemployment and continued job losses) remain.

This report examines the mortgage market in NI and RoI. It assesses the macro and micro factors affecting the market, and also examines the key players in the market. Drawing on exclusive consumer data, it examines in detail the distribution models within the market, focusing specifically on how consumers arrange mortgages.
TABLE OF CONTENT

INTRODUCTION
Key themes in the report 
Data sources 
Definitions 
Abbreviations 

EXECUTIVE SUMMARY
The market 
The All-Ireland mortgage market worth around €111 billion (£90 billion) 
Forecast 
Figure 1: Index value of outstanding mortgage debt, RoI and NI, 2008-18 
Market factors 
Property price stabilisation will instil confidence in consumers 
Unemployment represents major challenge to mortgage providers 
Consumer confidence remains low, despite recent gains 
Interest rates on mortgages not where they should be (theoretically) 
Mortgage arrears and defaults a major problem across Ireland 
Companies, brands and innovations 
The consumer 
Variable rate mortgages most popular, while most repaying capital plus interest 
Preference for going direct when arranging mortgage 
Around a third of all consumers currently have mortgages 
Irish consumers are debt-averse, financially-aware and sceptical 

ISSUES IN THE MARKET
Are there credible, appealing alternatives to taking out a mortgage? 
What type of mortgage is most popular? 
How are mortgages generally arranged? 
Have levels of mortgage ownership been affected by the downturn? 
What are Irish consumers’ general attitudes towards personal finance? 

TREND APPLICATION
The Nouveau Poor 
Why Buy 
Mintel Futures: Generation Next 

MARKET OVERVIEW
Key points 
Property prices stabilising – but far from highs of 2007 
NI prices up in 2012, but still down almost 60% on peak 
Figure 2: Residential property prices, all regions and all property types, NI, 2002-12 
RoI housing market (maybe) stabilising
Figure 3: Residential property prices, all regions and all types, RoI, 2005-12 
Figure 4: Residential property prices, all regions and all types, RoI, Jan-Dec 2012 
Unemployment represents major challenge to mortgage providers 
RoI unemployment rate more than doubled since 2008 
Figure 5: Unemployment rate, seasonally adjusted, RoI, 2008-12 
Unemployment lower in NI – but increase in long-term unemployed 
Figure 6: Unemployment rate, seasonally adjusted, NI, 2009-12 
Figure 7: Unemployment by age, NI, Q4 2012 
Irish consumers lacking confidence, despite recent improvements 
NI consumer confidence improved during 2012 
Figure 8: Consumer confidence index, NI, Dec 2009 to Dec 2012 
RoI consumer confidence still far lower than during boom years 
Figure 9: Consumer Sentiment Index, RoI, 2004-13 
Interest rates down, but mortgages stubbornly high 
Figure 10: Selected variable mortgage rates, 80% LTV, mainstream lenders, RoI and NI, February 2013 
Mortgage arrears in RoI now at ‘extraordinary’ level 
Repossessions in NI now at ‘critical point’ 
Trend towards more and smaller households in NI and RoI 
Strong growth in 1 and 2-person households in NI 
Figure 11: Projected households, by number of persons, NI, 2006-21 
Strongest growth in RoI was in 1-, 2- and 3-person households 
Figure 12: Households, by number of persons, RoI, 1996-11 

COMPETITIVE CONTEXT
Key points 
Renting not favoured as a long-term option by consumers 
Figure 13: Whether consumers wish to buy property in the future and when, RoI, February 2013 
Three quarters of UK (incl. NI) renters hope to own property in ten years 
Figure 14: Type of tenure aspired to by current private renters, two years and ten years, UK (incl. NI), 2012 .. 31
Rents stay constant, while property prices decline sharply 
Figure 15: Property sales and rental indices, RoI January 2006-December 2012 
Figure 16: Rental index, NI, 2008-12 

STRENGTHS AND WEAKNESSES
Strengths 
Weaknesses
MARKET SIZE AND FORECAST
Key points 
All-Ireland mortgage market down 28% on peak 
Figure 17: Value of outstanding mortgage debt, RoI, NI and All-Ireland, actual, forecast and projected,
2008-17 
£780 million in mortgage loans issued in NI in 2012 
First-time buyer activity reaches recent high in NI in 2012 
Figure 18: Number of mortgage loans issued to first-time buyers, NI, 2007-12 
10% decline in number of second mortgages issued in NI in 2012 
€2.6 billion in mortgage loans in RoI in 2012 (down 93% on peak)
Figure 19: Value of residential mortgage loans, € million, RoI, 2005-12 
First-time buyers made up 50% of all RoI mortgage lending in 2012
Figure 20: Value of residential mortgage loans, by category of loan, € million, RoI, 2012 
Market has a very different complexion to 2007 
Figure 21: Type of mortgage as % of all residential mortgage lending, RoI, 2007 and 2012
First-time buyer lending holding up better than other categories 
Figure 22: Value of residential mortgage loans, by category, €m, 2006-12
Average RoI FTB mortgage value down 35% from peak 
Figure 23: Average value of residential mortgage loans to first-time buyers, € 000s, RoI, 2005-12 
Huge decline in quantity of mortgage loans issued in RoI 
Figure 24: Number of residential mortgage loans, 000s, RoI, 2005-12 

MARKET SEGMENTATION
Key points 
Variable rate mortgages most popular among Irish consumers 
Figure 25: Type of mortgage rate, NI and RoI, 2012 
More consumers taking up the tracker option 
Figure 26: Consumers with a tracker rate mortgage, NI and RoI, 2008-12 
Little change in number opting for variable rate mortgages 
Figure 27: Consumers with a variable rate mortgage, NI and RoI, 2008-12 
Decline in proportion of consumers opting for fixed rates 
Figure 28: Consumers with fixed-rate mortgages, 2 years and 3-5 years, NI and RoI, 2008-12 
Most consumers repaying capital plus interest 
Figure 29: Type of mortgage (form of repayment), NI and RoI, 2012 

COMPANIES AND INNOVATIONS
Funding for lending scheme stimulates mortgage lending 
Lenders target first-time-buyers in New Year 
Mortgage Brain brings mortgages into the 21st Century 

COMPANY PROFILES
Allied Irish Bank (AIB) Group 
Bank of Ireland (BoI) Group 
Santander Group 
Danske Bank 
KBC Bank Ireland 
Permanent TSB 
Ulster Bank
Halifax 
Nationwide 
HSBC 

CHANNELS TO MARKET
Key points 
Preference for going direct when arranging mortgage 
Figure 30: How mortgage was arranged, NI and RoI, 2012 
Financial advisers more popular in NI than in RoI
NI ABC1s more inclined to go direct, C2DEs to financial advisers 
Figure 31: Consumers who arranged mortgage direct from bank/building society and through financial
adviser, by socio-economic background, NI, 2007-12 
Going direct becoming more popular among all consumers 
Figure 32: How mortgage was arranged, NI and RoI, 2007-12 

THE CONSUMER – OWNERSHIP OF MORTGAGES
Key points 
Mortgage ownership in decline among Irish consumers 
Figure 33: Mortgage ownership, NI and RoI, 2008-12 
Mortgage ownership peaks among consumers aged 35-44 
Figure 34: Mortgage ownership, by age, NI and RoI, 2012 
Employment and social status also key to mortgage ownership 
Figure 35: Mortgage ownership, by socio-economic background and working status, NI and RoI, 2012 
Only very minimal mortgage activity in 2012 
Figure 36: When mortgage was first taken out, NI and RoI, 2012 
Figure 37: Mortgage taken out in the last 12 months, NI and RoI, 2007-12 
Consumers paying up to £699 monthly in NI, up to €1,499 in RoI 
Figure 38: Monthly mortgage repayments, NI and RoI, 2012 
Small shift towards higher repayments in NI and RoI 
Figure 39: Selected monthly mortgage repayments, NI and RoI, 2010-12 
Most mortgages are ‘joint’ mortgages 
Fewer consumers making changes to their mortgages 
Figure 40: Consumers who have changed their mortgage account, NI and RoI, 2007-12 
Most NI mortgages for 21-25 years, but more spread out in RoI 
Figure 41: Length of time mortgage taken out for, NI and RoI, 2012 

THE CONSUMER – ATTITUDES TOWARDS FINANCE
Key points 
Figure 42: Agreement with statements relating to finance, NI and RoI, 2012 
Downturn and debt weighing heavily on Irish minds 
Figure 43: Agreement with statement ‘I don’t like the idea of being in debt’, by social class and working
status, NI and RoI, 2012 
RoI consumers more averse to debt since onset of crisis 
Figure 44: Agreement with the statement, ‘I don’t like the idea of being in debt’, NI and RoI, 2007-12 
Better awareness and knowledge since downturn 
Figure 45: Agreement with the statement ‘I am more aware of personal finance than I used to be’, NI and
RoI, 2007-12 
Are RoI consumers losing trust in banks? 
Figure 46: Agreement with statement ‘I trust banks/building societies to look after my money’, NI and RoI,
2009-12 
Signs that RoI consumers might also be losing faith in banks 
Figure 47: Agreement with statement ‘It is important that my bank understands my individual needs’, NI and
RoI, 2009-12 
Tendency to take professional advice in decline among consumers 
Figure 48: Agreement with statement ‘I usually consult a professional financial adviser before deciding on
financial matters’, NI and RoI, 2008-12 

APPENDIX
NI TGI usage tables 
Figure 49: Currently have mortgage, by all demographics, NI, 2012 
Figure 50: Person whose name the mortgage is under, by all demographics, NI, 2012 
Figure 51: When mortgage was first taken out, by all demographics, NI, 2012 
Figure 52: How long ago that mortgage was taken out, by all demographics, NI, 2012 
Figure 53: Type of mortgage owned, by all demographics, NI, 2012 
Figure 54: Type of mortgage owned, NI, 2008-12
Figure 55: Type of mortgage rate, by all demographics, NI, 2012
Figure 56: Type of mortgage rate, NI, 2008-12 
Figure 57: First property with mortgage, by all demographics, NI, 2012 
Figure 58: Monthly mortgage repayments, by all demographics, NI, 2012
Figure 59: Consumers who have changed their mortgage account, by all demographics, NI, 2012 
Figure 60: Consumers who have changed their mortgage account, NI, 2008-12 
Figure 61: Increased value of mortgage since first taken out, by all demographics, NI, 2012 
Figure 62: How mortgage was arranged, by all demographics, NI, 2012 
Figure 63: How mortgage was arranged, NI, 2008-12 
RoI TGI usage tables 
Figure 64: Currently have mortgage, by all demographics, RoI, 2012 
Figure 65: Person whose name the mortgage is under, by all demographics, RoI, 2012 
Figure 66: When mortgage was first taken out, by all demographics, RoI, 2012 
Figure 67: How long ago that mortgage was taken out, by all demographics, RoI, 2012 
Figure 68: Type of mortgage owned, by all demographics, RoI, 2012 
Figure 69: Type of mortgage owned, RoI, 2008-12 
Figure 70: Type of mortgage rate, by all demographics, RoI, 2012 
Figure 71: Type of mortgage rate, RoI, 2008-12 
Figure 72: First property with mortgage, by all demographics, RoI, 2012 
Figure 73: Monthly mortgage repayments, by all demographics, RoI, 2012 
Figure 74: Consumers who have changed their mortgage account, by all demographics, RoI, 2012 
Figure 75: Consumers who have changed their mortgage account, RoI, 2008-12 
Figure 76: Increased value of mortgage since first taken out, by all demographics, RoI, 2012 
Figure 77: How mortgage was arranged, by all demographics, RoI, 2012 
Figure 78: How mortgage was arranged, RoI, 2008-12 
NI finance statements 
Figure 79: Agreement with statements relating to finance, by all demographics, NI, 2012
Figure 80: Agreement with statements relating to finance, by all demographics, NI, 2012 (continued) 
Figure 81: Agreement with statements relating to finance, by all demographics, NI, 2012 (continued) 
Figure 82: Agreement with statements relating to finance, by all demographics, NI, 2012 (continued) 
RoI finance statements 
Figure 83: Agreement with statements relating to finance, by all demographics, RoI, 2012
Figure 84: Agreement with statements relating to finance, by all demographics, RoI, 2012 (continued) 
Figure 85: Agreement with statements relating to finance, by all demographics, RoI, 2012 (continued) 
Figure 86: Agreement with statements relating to finance, by all demographics, RoI, 2012 (continued)

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