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Mortgages - Ireland - March 2018

“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."
– Brian O’Connor, Senior Consumer Analyst

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Table of contents

  1. 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

                                                                                                                                                                    Mortgages - Ireland - March 2018

                                                                                                                                                                    £1,095.00 (Excl.Tax)