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MORTGAGES-IRELAND-MARCH 2018

Published By :

Mintel

Published Date : Mar 2018

Category :

Banking

No. of Pages : N/A

Although tight lending criteria and strict regulations are restricting access to mortgages for many consumers, there is a clear and discernible appetite among consumers for mortgages – not least because consumer confidence is high and interest rates are low for NI consumers and relatively low for RoI consumers.

Table of Contents

OVERVIEW
What you need to know
Issues covered in this Report
Definitions
EXECUTIVE SUMMARY
The market
Figure 1: Value of outstanding mortgage debt, IoI, RoI and NI, 2013-18
Forecast
Figure 2: Index of outstanding mortgage debt, actual, estimated, forecast and projected, RoI and NI, 2013-23
Market factors
Both Irish economies on sound footing, continuing to grow
Property prices recovering steadily, alongside growth in transactions
Mortgage interest rates extremely high in RoI, lower in NI
Companies and brands
The consumer
Mortgages on main home held by 34% in NI and 30% in RoI
Figure 3: Mortgage ownership, NI and RoI, January 2018
Fixed-rate repayment (NI), variable-rate repayment (RoI) most popular
Figure 4: Type of mortgage currently held, RoI and NI, January 2018
Most consumers not thinking about applying for a mortgage soon
Figure 5: Whether consumers are considering applying for a mortgage (ie for a first home, new home or buy-to-let purchase) or a remortgage for current home within the next 12 months, RoI and NI, January 2018
Most consumers soliciting professional advice when taking mortgage
Figure 6: Main source of advice used when last arranged mortgage/remortgage on main property, RoI and NI, January 2018
High level of uncertainty and confusion around mortgages and lenders
Figure 7: Agreement with statements relating to mortgages and mortgage providers, RoI and NI, January 2018
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Both Irish economies on sound footing
Property prices recovering steadily, alongside growth in transactions
Mortgage interest rates extremely high in RoI, lower in NI
MARKET SIZE AND FORECAST
Value of outstanding mortgages in Ireland to top €100 billion in 2018
Figure 8: Value of outstanding mortgage debt, actual, estimated, forecast and projected, IoI, RoI and NI, 2013-23
Modest growth expected in both markets between 2018 and 2023
Figure 9: Index of outstanding mortgage debt, actual, estimated, forecast and projected, RoI and NI, 2013-23
FTB and remortgage activity in NI at highest level in decade
Figure 10: Total number of loans advanced to first-time buyers, home movers and remortgages, NI, 2010-17
Steady growth in value of new mortgages of all types in NI
Figure 11: Value of new lending to first-time buyers, home movers and remortgagers, £ millions, NI, Q4 2015-Q4 2017
Big year-on-year increase in mortgage drawdowns in 2017 in RoI
Figure 12: Total number of mortgage drawdowns, by mortgage type, RoI, 2015-17
Figure 13: Total number of mortgage drawdowns, 000s, RoI, 2006-17
Value of mortgage drawdowns growing year on year, but down hugely on peak
Figure 14: Total value of mortgage drawdowns, € billions, RoI, 2006-17
MARKET DRIVERS
RoI economy on track to grow at solid pace during 2018 and into 2019
Figure 15: Annual GDP growth, actual and forecast, RoI, 2016-19
NI economy likely to achieve only slight growth over next year
Figure 16: Economic growth, actual and forecast, UK and NI, 2017 and 2018
Steady recovery in NI property prices since low of 2013
Figure 17: House price index, NI, 2005-17
Figure 18: Standardised residential prices, £ millions, NI, 2005-17
RoI property prices recovering strongly, but still down 23% on peak
Figure 19: Residential property price index, nationwide and Dublin, RoI, 2005-17
Volume of property transactions recovering, but far below boom levels
Figure 20: Residential property sales, NI, 2005-17
Figure 21: Residential property transactions, volume, RoI, 2010-17
RoI mortgage holders paying highest interest rates in eurozone
Figure 22: Retail interest rates on loans for house purchase with original maturity date, RoI, 2008-17
Mortgage interest rates in UK (including NI) significantly lower than in RoI
Figure 23: Effective interest rates on new mortgages, UK (incl. NI), January 2016-18
More than a quarter could comfortably absorb increased repayments
Figure 24: How consumers rate their current financial situation, NI and RoI, January 2018
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Central Bank of Ireland tweaks mortgage lending rules for 2018
Bank of England raises base rate to 0.5%
Industry-wide tracker mortgage fallout continues to affect some key players in the Irish market
Nationwide warns UK housing market, including NI, of signs of slowing down in 2018
Permanent TSB offloads €4 billion of non-performing loans
COMPANIES AND BRANDS
Allied Irish Bank
Key facts
Product portfolio
Recent developments
Bank of Ireland
Key facts
Product portfolio
Recent developments
Danske Bank
Key facts
Product portfolio
Recent developments
HSBC
Key facts
Product portfolio
KBC Ireland
Key facts
Product portfolio
Recent developments
Nationwide
Key facts
Product portfolio
Recent developments
Permanent TSB
Key facts
Product portfolio
Recent developments
Santander
Key facts
Product portfolio
Recent developments
Ulster Bank
Key facts
Product portfolio
Recent developments
Halifax
Key facts
Product portfolio
Progressive Building Society
Key facts
Product portfolio
Recent developments
WHO’S INNOVATING?
Digital mortgage innovation
Peer-to-peer mortgage platforms
Rental payments could support mortgage applications
THE CONSUMER – WHAT YOU NEED TO KNOW
Mortgages on main home held by 34% in NI and 30% in RoI
Fixed-rate repayment (NI), variable-rate repayment (RoI) most popular
Most consumers not thinking about applying for a mortgage soon
Most consumers soliciting professional advice when taking out mortgage
High level of uncertainty and confusion around mortgages and lenders
OWNERSHIP OF MORTGAGES
Around one in three Irish consumers have an outstanding mortgage
Figure 25: Mortgage ownership, NI and RoI, January 2018
Figure 26: Mortgage ownership, NI and RoI, 2014-18
Mortgage ownership strongly linked to marital status
Figure 27: Mortgage ownership, by marital status, NI and RoI, January 2018
Mortgage ownership peaks among consumers aged 35-54
Figure 28: Mortgage ownership, by age, NI and RoI, January 2018
Mortgage ownership highest among consumers in full-time employment
Figure 29: Mortgage ownership, by employment status, NI and RoI, January 2018
ABC1s and high earners have easiest access to mortgage loans
Figure 30: Mortgage ownership, by social class, NI and RoI, January 2018
Figure 31: Mortgage ownership, by gross annual household income, NI and RoI, January 2018
TYPE OF MORTGAGE OWNED
Fixed-rate repayment leads in NI, variable-rate repayment in RoI
Figure 32: Type of mortgage currently held, RoI and NI, January 2018
Most in NI opt for fixed rate, most in RoI opt for variable/tracker
Figure 33: Type of mortgage currently held – Fixed rate or variable/tracker rate, RoI and NI, January 2018
Almost four in 10 mortgage holders on interest-only arrangements
Figure 34: Type of mortgage currently held – Interest-only or repayment, RoI and NI, January 2018
FUTURE INTENTIONS
Majority of Irish consumers do not intend to apply for a mortgage
Figure 35: Whether consumers are considering applying for a mortgage (i.e. for a first home, new home or buy-to-let purchase) or a remortgage for current home within the next 12 months, RoI and NI, January 2018
Tendency not to be considering mortgage application rises with age
Figure 36: Consumers who are not considering applying for a mortgage (ie for a first home, new home or buy-to-let purchase) or a remortgage for current home within the next 12 months, by gender and age, RoI and NI, January 2018
Low earners most inclined to not be considering mortgage application
Figure 37: Consumers who are not considering applying for a mortgage (ie for a first home, new home or buy-to-let purchase) or a remortgage for current home within the next 12 months, by gross annual household income, RoI and NI, January 2018
Figure 38: Consumers who are not considering applying for a mortgage (ie for a first home, new home or buy-to-let purchase) or a remortgage for current home within the next 12 months, by social class, RoI and NI, January 2018
Class and income major factors in likelihood to apply for FTB mortgage in RoI
Figure 39: Considering applying for a mortgage for a first home within the next 12 months, by social class and gross annual household income, RoI, January 2018
SOURCES OF ADVICE
Consumers take professional advice when arranging mortgages
Figure 40: Main source of advice used when last arranged mortgage/remortgage on main property, RoI and NI, January 2018
Almost half of all consumers took advice from mortgage lender
Sizeable minorities opting for specialist brokers and advisers
Online channels remain peripheral for mortgage advice
ATTITUDES TOWARDS MORTGAGES
Consumers uncertain and ambivalent about mortgages and advisers
Figure 41: Agreement with statements relating to mortgages and mortgage providers, RoI and NI, January 2018
Consumers unconvinced about whether paying for advice is worthwhile
Figure 42: Agreement with statements relating to mortgage advisers and mortgage advice, RoI and NI, January 2018
Confidence in property market far higher among RoI consumers
Figure 43: Agreement with statements relating to current climate for mortgages and property, RoI and NI, January 2018
Concern around lack of affordability and vulnerability to rates increasing
Figure 44: Agreement with statements relating to mortgages and affordability, RoI and NI, January 2018
Consumers sceptical about gimmicks, but see switching as hassle
Figure 45: Agreement with statements relating to switching, RoI and NI, January 2018
Doubts as to whether lenders giving best available terms
Figure 46: Agreement with statement, 'I trust that my bank/building society has me on the best mortgage deal', RoI and NI, January 2018
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Definition
Data sources
Abbreviations

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