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Mortgages - Ireland - March 2016

Published By :

Mintel

Published Date : Mar 2016

Category :

Banking

No. of Pages : N/A

Although the Irish mortgage market has re-established itself following the turmoil of the post-financial crisis and recession years, the value of outstanding mortgage lending is

Table of Content

Overview

What you need to know
Products covered in this Report

Executive Summary

The market
Figure 1: Value of outstanding mortgage debt, All-Ireland, NI and RoI, 2011-2020
Forecast
Figure 2: Indexed value of outstanding mortgage debt, All-Ireland, NI and RoI, 2011-20
Market factors
Economic growth leading to job creation and confidence
Interest rates not as low as they theoretically should be
Property prices increasing – But affordability better than before
Arrears and repossessions remain a problem in NI and RoI
The consumer
Mortgage ownership at 38% in NI, 33% in RoI
Figure 3: Ownership of mortgage on current property, RoI and NI, February 2016
Repayment mortgages favoured by 65% in RoI, 60% in NI
Figure 4: Types of mortgages currently owned by consumers, RoI and NI, February 2016
Majority of consumers have no intention of applying for a mortgage
Figure 5: Intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, RoI and NI, February 2016
Consumers turning to professionals for advice on mortgages
Figure 6: Sources of advice used by consumers for their last mortgage or remortgage of their main property, NI and RoI, February 2016
What it means

Issues and Insights

PR and other benefits to saving what could be a lost generation
The facts
The implications
Are lenders at risk of losing touch with younger consumers?
The facts
The implications
Prevalence of interest-only mortgages could spell trouble
The facts
The implications

The Market – What You Need to Know

Economic growth leading to job creation and confidence
Interest rates not as low as they theoretically should be
Property prices increasing – But affordability better than before
Arrears and repossessions remain a problem in NI and RoI

Market Size and Forecast

Total mortgage market worth around €108 billion (£90 billion) in 2015
Figure 7: Value of outstanding mortgage debt, All-Ireland, NI and RoI, 2011-2020
Outstanding mortgage value to reach around €115 billion by 2020
Figure 8: Indexed value of outstanding mortgage debt, All-Ireland, NI and RoI, 2011-20
The MMR and MCD
NI mortgage activity reached recent peak in Q4 2015
Figure 9: Total number of loans advanced for house purchase, NI, Q4 2012-Q4 2015
Number of NI mortgage loans tops 13,000 in 2015
Figure 10: Total number of loans advanced for house purchase, NI, 2011-15
NI mortgage loans issued in Q4 2015 worth £380 million
Figure 11: Total value of loans advanced for house purchase, £m, NI, Q4 2012-Q4 2015
Value of mortgage loans issued in 2015 steady at £1.3 billion
Figure 12: Total value of loans advanced for house purchase, £m, NI, 2011-15
First-time buyers constitute bulk of mortgage borrowers in NI in 2015
Figure 13: Total number of loans advanced for house purchase, NI, 2011-15
NI first-time buyers borrowing 7% more in 2015 than in 2014
Figure 14: Average mortgage loan size, first-time buyers and home movers, NI, Q4 2014-Q4 2015
NI first-time buyers borrowing 2.8 times their income in Q4 2015
Figure 15: Average loan-to-income, first-time buyers and home movers, NI, Q4 2014-Q4 2015
RoI's volume of mortgages issued up 24% in 2015
Figure 16: Volume of mortgage loans, by category, RoI, Q3 2013-Q4 2015
Continued growth in number of mortgage approvals in RoI
Figure 17: Annual mortgage approval volumes, RoI, 2011-15
First-time buyers emerging as main force in RoI mortgage market
Figure 18: Mortgage loan borrower type, RoI, 2011-15
RoI's value of mortgage loans issued up 26% in 2015
Figure 19: Value of mortgage loans, by category, RoI, Q3 2013-Q4 2015
First-time buyer and mover purchaser mortgages account for 85% of value
Figure 20: Value of mortgage loans, by category, RoI, Q4 2015
RoI market size in reverse due to repayments exceeding drawdowns
Figure 21: Mortgage drawdowns and net mortgage transactions, €m, RoI, Q3 2013-Q4 2015
Affordability a bigger challenge for Dublin consumers
Figure 22: House price affordability, price to income multiple, RoI, Q4 2015

Market Drivers

Economic recovery leading to employment growth in NI and RoI
Figure 23: Unemployment rate, %, NI, Q4 2005-Q4 2015
Figure 24: Numbers in employment, 000s, NI, September 2012-November 2015
Figure 25: Unemployment rate, %, RoI, December 2013-December 2015
Base rates on the floor – But not all borrowers gaining to the full
Figure 26: Base interest rates, ECB and BoE, January 2008-January 2016
Mortgage cost down around a third for NI consumers over last six years
Mortgage rates in RoI higher than anywhere else in the EU
Property prices recovering but still below economic boom levels
Figure 27: Residential property price index values, NI, Q4 2007-Q4 2015
NI property more than twice as affordable in 2015 as it was in 2007
Figure 28: Ratio of median residential property sale price to median annual gross annual earnings, NI, 2005-15
Transaction activity not yet returned to NI property market
Figure 29: Number of residential property sales, NI, 2007-15
NI house price growth of 5% forecast for 2016
RoI residential property prices up 10.6% in 2015
Figure 30: Residential property price index, RoI, 2005-15
RoI property price growth expected to moderate significantly in 2016
Residential rents approaching pre-recession high point in RoI
Figure 31: Residential rental index, RoI, 2006-15
Availability of properties to rent down significantly on recent years
Rental yields of more than 10% available on RoI residential property
Figure 32: Rental yields, one-bed apartment, main cities, RoI, 2015
More than 8% of all RoI mortgages are in arrears for more than 90 days
Figure 33: Percentage of mortgage loan accounts in arrears for more than 90 days, volume and value, RoI, Q4 2012-Q4 2015
Almost 50,000 mortgage accounts in very severe difficulty
Figure 34: Length of arrears in residential mortgage arrears cases outstanding, RoI, Q4 2015
Repossessions continuing to rise in RoI
Figure 35: Residential properties in possession, end of Q4, 2012-15
Home repossessions in NI far higher than 2007 level
High level of restructurings keeping arrears and repossessions down
Figure 36: Total residential mortgage accounts restructured, Q4 2012-Q4 2015
Almost one in five investment mortgages in arrears in RoI
Figure 37: Percentage of buy-to-Let residential mortgage loan accounts in arrears for more than 90 days, RoI, 2012-15

Key Players and Competitive Strategies – What You Need to Know

Permanent TSB offers 3 in 1 mortgage
Bank of Ireland offers top-up savings
New lender Pepper enters the market
HSBC launches one-day in-branch mortgage approval
AIB reduces variable rates while BoI reduces fixed rates
The future of mortgages is online
Bank of Ireland enters into partnership with AA
Halifax offers cashback and reduced rates
Santander increases LTV limits on flats

Competitive Strategies

Permanent TSB offers 3 in 1 mortgage
Bank of Ireland offers top-up savings
New lender Pepper enters the Irish mortgage market
HSBC one-day in-branch mortgage approval
AIB reduces variable interest rates while Bank of Ireland reduces fixed interest rates
The future of mortgages is online

Companies and Brands

Allied Irish Bank
Key facts
AIB mortgage products
First Trust mortgage products
Recent developments
Bank of Ireland
Key facts
Mortgage products
Recent developments
Danske Bank
Key facts
Mortgage products
Recent developments
Halifax
Key facts
Mortgage products
Recent developments
HSBC
Mortgage products
KBC Ireland
Key facts
Mortgage products
Recent developments
Nationwide
Key facts
Mortgage products
Permanent TSB
Key facts
Mortgage products
Recent developments
Santander
Key facts
Mortgage products
Recent developments
Ulster Bank
Key facts
NI mortgage products
RoI mortgage products
Recent developments

The Consumer – What You Need to Know

Mortgage ownership at 38% in NI, 33% in RoI
Repayment mortgages favoured by 65% in RoI, 60% in NI
Majority of consumers have no intention of applying for a mortgage
Consumers turning to professionals for advice on mortgages

The Consumer – Ownership of Mortgages

More than a third of Irish consumers currently hold a mortgage
Figure 38: Ownership of mortgage on current property, RoI and NI, February 2016
Mortgage ownership at peak among consumers aged 35-54
Figure 39: Ownership of mortgage on current property, by gender and age, RoI and NI, February 2016
Mortgage ownership highest among ABC1s and those in employment
Figure 40: Ownership of mortgage on current property, by work status, RoI and NI, February 2016
Figure 41: Ownership of mortgage on current property, by social class, RoI and NI, February 2016
Ownership significantly higher among married/cohabiting consumers
Figure 42: Ownership of mortgage on current property, by marital status, RoI and NI, February 2016

The Consumer – Type of Mortgages Owned

Strong preference for repayment over interest-only mortgages
Figure 43: Types of mortgages currently owned by consumers, RoI and NI, February 2016
Preference for variable/tracker rates in RoI, fixed rates in NI

The Consumer – Future Intentions

Around three quarters unlikely to take out mortgage in coming year
Figure 44: Intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, RoI and NI, February 2016
No change in RoI consumers' mortgage intentions
Figure 45: Intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, RoI, December 2014 and February 2016
Significant decline in intent among NI consumers
Figure 46: Intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, NI, December 2014 and February 2016
Only one in 50 intending to borrow to invest in property
Resistance to applying lowest among consumers aged 25-44
Figure 47: No intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, by gender and age, RoI and NI, February 2016
Work status and class important factors in determining intent
Figure 48: No intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, by work status, RoI and NI, February 2016
Figure 49: No intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, by social class, RoI and NI, February 2016
Help to Buy ISA scheme appealing to first-time buyers in NI
Figure 50: Use of or intention to use government Help to Buy ISA scheme for first-time buyers, NI, February 2016

The Consumer – Arranging Mortgages

Preference for direct, professional advice when taking out mortgages
Figure 51: Sources of advice used by consumers for their last mortgage or remortgage of their main property, NI and RoI, February 2016
Older consumers using advisers from banks/building societies
Figure 52: Consumers who used an adviser from the bank/building society that provided the mortgage for their last mortgage or remortgage of their main property, by age and social class, RoI, February 2016
Self-employed and part-time employees consulting brokers
Figure 53: Consumers who used a specialist mortgage broker for their last mortgage or remortgage of their main property, by age and work status, RoI, February 2016
Younger consumers and C2DEFs seeking advice from friends/family
Figure 54: Consumers who consulted family or friends for their last mortgage or remortgage of their main property, by age and social class, RoI, February 2016

Appendix – Data Sources, Abbreviations and Supporting Information

Market size rationale
Data sources
Abbreviations

Appendix – The Consumer

NI Toluna data
Figure 55: Ownership of mortgage on current property, by demographics, NI, February 2016
Figure 56: Types of mortgages currently owned by consumers, by demographics, NI, February 2016
Figure 57: Intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, by demographics, NI, February 2016
Figure 58: Use of or intention to use government Help to Buy ISA scheme for first-time buyers, by demographics, NI, February 2016
Figure 59: Sources of advice used by consumers for their last mortgage or remortgage of their main property, by demographics, NI, February 2016
Figure 60: Sources of advice used by consumers for their last mortgage or remortgage of their main property, by demographics, NI, February 2016 (continued)
RoI Toluna data
Figure 61: Ownership of mortgage on current property, by demographics, RoI, February 2016
Figure 62: Types of mortgages currently owned by consumers, by demographics, RoI, February 2016
Figure 63: Intention to apply for a mortgage (ie for a first home or buy-to-let purchase) or a remortgage for their current home within the next 12 months, by demographics, RoI, February 2016
Figure 64: Sources of advice used by consumers for their last mortgage or remortgage of their main property, by demographics, RoI, February 2016
Figure 65: Sources of advice used by consumers for their last mortgage or remortgage of their main property, by demographics, RoI, February 2016 (continued)

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