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Mortgages - Ireland - December 2011

The impact of the housing market crash in Ireland is still having an effect on the mortgage market, with consumers less willing to take out a mortgage and banks less willing to lend. This has led to a steep slump in the value of the mortgage market.

The number of Irish mortgages in arrears has increased in 2011, and the uncertainty in the eurozone is likely to continue to hamper any kind of recovery in the market. This report examines the current state of the market and assesses how current conditions may improve or deteriorate.

Some key questions answered in the report include:

  • How has consumer demand changed since the housing crash? – Are consumers still shying away from mortgages, or has the market recovered at all? Are financial institutions still unwilling to lend?
  • How are poor economic conditions and employment prospects impacting upon the mortgage market? – Has high unemployment pushed up the number of repossessions? What measures are being taken to prevent more consumers falling into arrears?
  • What is the most common type of mortgage owned? – Has the recession changed the uptake of fixed mortgages versus variable and tracker rate mortgages?
  • How has the housing market crash impacted upon banks? – How have the troubles faced by the mortgage market impacted upon the profitability of banks? Has it also affected their brand image?
  • Has the slowdown in the market prompted new innovation? – In what ways are financial institutions combating the tougher conditions in the market?

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Table of contents

  1. Issues in the Market

      • Key themes in the report
        • Definition
          • Abbreviations
          • Insights and Opportunities

            • No better time to buy?
              • Online mortgage applications remain low
                • Boomerang generation slow to enter mortgage market
                • Market in Brief

                  • Mortgage market still suffering
                    • More mortgage holders enter arrears
                      • Rental market benefiting
                        • Variable rate mortgages see most ownership
                        • Fast Forward Trends

                            • Trend 1: Totophobia
                              • What’s it about?
                                • What we’ve seen
                                  • What next?
                                    • Trend 2: Why Buy
                                      • What’s it about?
                                        • What we’ve seen
                                          • What next?
                                          • Internal Market Environment

                                            • Key points
                                              • Subdued interest rates
                                                • Figure 1: Official Bank of England and European Central Bank interest rates, October 2008-December 2011
                                              • Banks failing to pass on the savings
                                                  • Figure 2: Official Bank of England interest rates, European Central Bank Interest rates and effective mortgage rates, October 2008-December 2010
                                                • Banks expecting higher deposits
                                                  • Figure 3: Number of mortgage products available to the UK/NI market, by required deposit, 2009 and 2011
                                                • Higher costs putting off first-time buyers
                                                  • Figure 4: Mortgage deposit as a proportion of price, by type of borrower, UK, 1990-2011
                                                • Higher deposits changing the demographics of first-time buyers
                                                    • Figure 5: First property with mortgage, by age, NI and RoI, 2009 and 2011
                                                  • FSA cancels mortgage rejection legislation
                                                    • Number of properties in arrears continues to grow in 2011
                                                      • Figure 6: Residential mortgage arrears, repossessions and restructures statistics, December 2010-September 2011
                                                    • Those with SVR mortgages more at risk of arrears
                                                      • Figure 7: Mortgage holders behind in payments or in arrears, by type of mortgage, RoI, 2011
                                                    • A third of Irish homeowners have negative equity
                                                      • Negative equity could last a lifetime
                                                        • Help at hand for struggling consumers
                                                          • Complaints about mortgages increase between 2007 and 2010
                                                            • Figure 8: Complaints received about mortgages and mortgage products, UK and RoI, 2007-11
                                                            • Figure 9: Complaints received about mortgages and mortgage products, by type of complaint, RoI, 2010
                                                          • New EU legislation for the mortgage markets in RoI and UK
                                                          • Broader Market Environment

                                                            • Key points
                                                              • 2011 sees housing prices decline further
                                                                • Figure 10: House price index, NI and RoI, 2005-11
                                                              • NI housing market experienced bigger drop
                                                                • Economic outlook will continue to hamper the mortgage market
                                                                  • Figure 11: Economic outlook, RoI and NI, 2009-11
                                                                • Eurozone troubles take their toll on consumers’ confidence.
                                                                  • Figure 12: Consumer Sentiment/Confidence Index, UK (inc NI) and RoI, October 2008-October 2011
                                                                • Unemployment continues to rise throughout 2011
                                                                  • Figure 13: Unemployment rates, RoI and NI, July 2009-September 2011
                                                                • Average salaries fail to keep pace with cost of living
                                                                  • Figure 14: Median gross weekly pay, NI and RoI, 2006-11
                                                                  • Figure 15: Issues concerning consumers, RoI and NI, 2011
                                                              • Competitive Context

                                                                • Key points
                                                                  • UK buy-to-let market recovering in recession, RoI still declining
                                                                    • Figure 16: Volume and value of buy-to-let mortgages, UK and RoI, 2007-10
                                                                  • NI rental rates increase from 2009, despite declining house prices
                                                                    • Figure 17: Citylets.co.uk rental index, NI, January 2008-September 2011
                                                                  • RoI rent rates somewhat stabilised
                                                                    • Figure 18: National rental index, RoI, January 2007-October 2011
                                                                • Strengths and Weaknesses

                                                                  • Strengths
                                                                    • Weaknesses
                                                                    • Who’s Innovating?

                                                                      • Key points
                                                                        • NI mortgage lenders may face competition from NAMA
                                                                          • UK banks offer ‘switch and fix’
                                                                            • Northern Bank takes steps to stimulate the NI mortgage market
                                                                              • Incentive for consumers with tracker mortgages
                                                                                • Mates mortgages
                                                                                • Market Size and Forecast

                                                                                  • Key points
                                                                                    • Mortgage market floundering in recession
                                                                                      • Figure 19: Value of outstanding mortgage debt, RoI, NI and all Ireland, 2005-16
                                                                                    • RoI segment accounts for the high loss in value
                                                                                      • Figure 20: What consumers intend to spend money on in the next 12 months, NI and RoI, June 2011
                                                                                    • NI outstanding debt value increased in 2011
                                                                                      • RoI mortgage approval rates drop 88% between 2006 and 2011
                                                                                        • Figure 21: Number and value of mortgage loans approved, RoI, 2005-16
                                                                                      • NI mortgage approvals also weak in 2011
                                                                                        • Figure 22: Number and value of mortgage loans approved, NI, 2005-16
                                                                                      • First-time buyers account for a bigger percentage of the RoI mortgage market
                                                                                        • Figure 23: Segmentation of the mortgage market, by value, RoI, 2006-11
                                                                                    • Companies and Products

                                                                                        • Allied Irish Bank (AIB) Group
                                                                                          • Bank of Ireland (BoI) Group
                                                                                            • Santander Group
                                                                                              • Danske Bank Group
                                                                                                • National Irish Bank (NIB)
                                                                                                  • Northern Bank
                                                                                                    • KBC Bank
                                                                                                      • Permanent TSB
                                                                                                        • Ulster Bank
                                                                                                        • Channels to Market

                                                                                                          • Key points
                                                                                                            • Irish consumers prefer to go direct
                                                                                                              • Figure 24: How mortgage was arranged, NI and RoI, 2007-11
                                                                                                            • Consumers still seek mortgage advice
                                                                                                              • Figure 25: Agreement with the statement ‘I usually consult a professional financial adviser before deciding on financial matters’, NI and RoI, 2007-11
                                                                                                            • Only 1% arrange mortgages online
                                                                                                              • Figure 26: How mortgage was arranged, NI and RoI, 2011
                                                                                                          • The Consumer – Mortgage Ownership

                                                                                                            • Key points
                                                                                                              • Mortgage ownership stagnates
                                                                                                                  • Figure 27: Mortgage ownership, NI and RoI, 2004-11
                                                                                                                • Mortgage ownership highest among 35-44s
                                                                                                                    • Figure 28: Mortgage ownership, by age, NI and RoI, 2011
                                                                                                                  • Few consumers take the mortgage plunge in 2011
                                                                                                                      • Figure 29: Mortgage ownership taken out in the last 12 months, NI and RoI, 2007-11
                                                                                                                      • Figure 30: When mortgage was first taken out, NI and RoI, 2011
                                                                                                                    • Joint mortgage the most common
                                                                                                                      • Figure 31: Person whose name the mortgage is under, NI and RoI, 2011
                                                                                                                    • Demand for joint mortgages set to rise in RoI, but fall in NI
                                                                                                                      • Irish consumers opt for variable rate mortgages
                                                                                                                        • Figure 32: Type of mortgage rate, by demographics, NI, 2007-11
                                                                                                                      • Drive for value sees consumers turn to tracker mortgages
                                                                                                                        • Consumers pay off between €375 and €1,049 per month
                                                                                                                            • Figure 33: Monthly mortgage repayments, NI and RoI, 2011
                                                                                                                          • Paying back more each month
                                                                                                                            • Figure 34: Selected monthly mortgage repayments, NI and RoI, 2010 and 2011
                                                                                                                          • Irish consumers less willing to change their mortgage
                                                                                                                            • Figure 35: Changes made to mortgage, NI and RoI, 2007-11
                                                                                                                        • The Consumer – Attitudes towards Finance

                                                                                                                          • Key points
                                                                                                                              • Figure 36: Agreement with statements relating to finance, NI and RoI, 2011
                                                                                                                            • Debt worries plague Irish consumers
                                                                                                                                • Figure 37: Agreement with statement ‘I don't like the idea of being in debt’, NI and RoI, 2007-11
                                                                                                                              • Irish consumers deep in thought
                                                                                                                                  • Figure 38: Agreement with statement ‘Before making any big outlay, I think about it for a while’, by age, NI and RoI, 2011
                                                                                                                                  • Figure 39: Agreement with statement ‘I am more aware of personal finance than I used to be’, NI and RoI, 2007-11
                                                                                                                                • RoI consumers more likely to save for things
                                                                                                                                    • Figure 40: Agreement with statement ‘If there's something I want I save up for it’, NI and RoI, 2007-11
                                                                                                                                  • Where did the trust go?
                                                                                                                                    • Figure 41: Agreement with statement ‘I trust banks/building societies to look after my money’, NI and RoI, 2009-11
                                                                                                                                  • NI consumers a little more trusting
                                                                                                                                  • Appendix

                                                                                                                                    • NI – Mortgage usage tables
                                                                                                                                      • Figure 42: Currently have mortgage, by demographics, NI, 2011
                                                                                                                                      • Figure 43: Person whose name the mortgage is under, by demographics, NI, 2011
                                                                                                                                      • Figure 44: When mortgage was first taken out, by demographics, NI, 2011
                                                                                                                                      • Figure 45: How long ago that mortgage was taken out, by demographics, NI, 2011
                                                                                                                                      • Figure 46: Type of mortgage owned, NI, 2007-11
                                                                                                                                      • Figure 47: Type of mortgage rate, NI, 2007-11
                                                                                                                                      • Figure 48: First property with mortgage, by demographics, NI, 2011
                                                                                                                                      • Figure 49: Monthly mortgage repayments, by demographics, NI, 2011
                                                                                                                                      • Figure 50: Consumers who have changed their mortgage account, NI, 2011
                                                                                                                                      • Figure 51: Increased value of mortgage since first taken out, by demographics, NI, 2011
                                                                                                                                      • Figure 52: How mortgage was arranged, NI, 2007-11
                                                                                                                                    • RoI – Mortgage usage tables
                                                                                                                                      • Figure 53: Currently have mortgage, by demographics, RoI, 2011
                                                                                                                                      • Figure 54: Person whose name the mortgage is under, by demographics, RoI, 2011
                                                                                                                                      • Figure 55: When mortgage was first taken out, by demographics, RoI, 2011
                                                                                                                                      • Figure 56: How long ago that mortgage was taken out, by demographics, RoI, 2011
                                                                                                                                      • Figure 57: Type of mortgage owned, RoI, 2007-11
                                                                                                                                      • Figure 58: Type of mortgage rate, RoI, 2007-11
                                                                                                                                      • Figure 59: First property with mortgage, by demographics, RoI, 2011
                                                                                                                                      • Figure 60: Monthly mortgage repayments, by demographics, RoI, 2011
                                                                                                                                      • Figure 61: Consumers who have changed their mortgage account, RoI, 2007-11
                                                                                                                                      • Figure 62: Increased value of mortgage since first taken out, by demographics, RoI, 2011
                                                                                                                                      • Figure 63: How mortgage was arranged, RoI, 2007-11
                                                                                                                                    • NI finance statements
                                                                                                                                      • Figure 64: Agreement with statements relating to finance, by demographics, NI, 2011
                                                                                                                                      • Figure 65: Agreement with statements relating to finance (continued), by demographics, NI, 2011
                                                                                                                                      • Figure 66: Agreement with statements relating to finance (continued), by demographics, NI, 2011
                                                                                                                                      • Figure 67: Agreement with statements relating to finance (continued), by demographics, NI, 2011
                                                                                                                                    • RoI finance statements
                                                                                                                                      • Figure 68: Agreement with statements relating to finance, by demographics, RoI, 2011
                                                                                                                                      • Figure 69: Agreement with statements relating to finance (continued), by demographics, RoI, 2011
                                                                                                                                      • Figure 70: Agreement with statements relating to finance (continued), by demographics, RoI, 2011
                                                                                                                                      • Figure 71: Agreement with statements relating to finance (continued), by demographics, RoI, 2011

                                                                                                                                  Companies Covered

                                                                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                                                                  Mortgages - Ireland - December 2011

                                                                                                                                  £1,095.00 (Excl.Tax)