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Mortgages - Ireland - September 2010

The mortgage market in Ireland has changed dramatically since the house price crash and subsequent credit crunch, and the market continues to operate in a state of instability and fluctuation.

Irish and British banks have not yet recovered from the debilitating losses which continue to constrain liquidity; many lenders have exited the Irish market and the range of mortgage products has narrowed, as banks apply more cautious lending policies.

Furthermore, expectations of further housing price deflation in the medium term and the potential for further weakening of the labour market in both NI and RoI have not helped renew confidence in the Irish mortgage market.

The market is therefore likely to remain subdued and with greater monitoring and vigilance on the part of regulatory bodies. However, the market is showing signs of responding and adapting to its altered environment with the development of new and innovative products.

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Table of contents

  1. Issues in the Market

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

              • Remortgaging opportunities
                • Higher-risk opportunities exist
                  • Ready for the upturn
                  • Market in Brief

                    • Mortgage market adjusts to new paradigm
                      • Supplyside pressures squeezing the market…
                        • …as is weakening demand
                          • Low lending rates a protective factor?
                            • The target market
                              • Consumer trends
                                • Going forward
                                • Fast Forward Trends

                                    • Trend 1: Staying Connected
                                      • What's it about?
                                        • What we've seen
                                          • Specifics
                                            • What next?
                                              • Trend 2: Stress Society
                                                • What's it about?
                                                  • What we've seen
                                                    • Specifics
                                                      • What next?
                                                      • Internal Market Environment

                                                        • Key points
                                                          • Supplyside concerns exist
                                                            • A smaller marketplace
                                                              • Fewer products available
                                                                • Liquidity and viability concerns persist
                                                                  • Figure 1: NI and RoI bank losses 2009
                                                                • Continued dependence on government support
                                                                  • Credit standards tightening
                                                                      • Figure 2: Change and expected change in house purchase credit standards (last three months/next three months), RoI, January 2007-April 2010
                                                                      • Figure 3: Change in house purchase terms and conditions (last three months), RoI, January 2007-April 2010
                                                                    • Regulatory pressures building
                                                                      • Defaults on the rise
                                                                        • Lending rates a stabilising factor
                                                                          • Figure 4: Mortgage lending rate and base rate, UK, November 2007-May 2010
                                                                          • Figure 5: Outstanding and new mortgage lending rates, RoI, January 2009-May 2010
                                                                        • Consumer demand for mortgage weakens
                                                                          • Figure 6: Demand for household secured lending, UK, Q2 2007-Q2 2010
                                                                          • Figure 7: Demand for household secured lending, RoI, January 2007-April 2010
                                                                      • Broader Market Environment

                                                                        • Key points
                                                                          • Housing bubble to deflate further?
                                                                              • Figure 8: House and retail prices indices, NI and UK, Q1 1987-Q1 2010
                                                                            • Economic growth prospects weak
                                                                              • Growth will be jobless and not mortgage-friendly
                                                                                • Figure 9: High growth scenario – forecast key economic Indicators, RoI (2009), 2009-20
                                                                              • Consumers worse off since recession
                                                                                • Consumer confidence remains weak
                                                                                  • Population growth and smaller household sizes a longer-term positive?
                                                                                    • RoI population projections may adjust
                                                                                      • Figure 10: Projected population, RoI, 2006-41
                                                                                    • Ageing population associated with more outright owners
                                                                                      • Figure 11: Projected population, by age band, NI, 2008-46
                                                                                    • Decreasing household size contributing to market growth
                                                                                    • Competitive Context

                                                                                      • Key points
                                                                                        • Investors’ market reduced
                                                                                          • Figure 12: Buy-to-let mortgage values and volumes, RoI, Q1 2008-Q1 2010
                                                                                        • No place like home
                                                                                          • Reluctant renters waiting to return
                                                                                            • Mortgage-free wannabes
                                                                                            • Strengths and Weaknesses

                                                                                              • Strengths
                                                                                                • Weaknesses
                                                                                                • Who’s Innovating?

                                                                                                  • Key points
                                                                                                    • Negative Equity mortgages
                                                                                                      • Protection against falling house prices
                                                                                                        • Family offset mortgages
                                                                                                        • Market Size and Forecast

                                                                                                          • Key points
                                                                                                            • Market continues to shrink
                                                                                                              • Figure 13: Value of outstanding mortgage debt, RoI, NI and all Ireland, 2004-10
                                                                                                            • Market outlook remains bleak
                                                                                                              • RoI
                                                                                                                  • Figure 14: Number and value of mortgage loans approved, RoI, 2005-15
                                                                                                                • NI
                                                                                                                  • Figure 15: Number and value of mortgage loans approved, NI, 2005-15
                                                                                                              • Market Segmentation

                                                                                                                • Key points
                                                                                                                  • Will first-time buyers save the day?
                                                                                                                    • Figure 16: Segmentation of the mortgage market, by value, RoI, 2006-09
                                                                                                                    • Figure 17: Number of mortgage loans approved, by buyer type, NI, 2005-09
                                                                                                                  • Switchers’ market remains important
                                                                                                                    • Dependence on buy-to-let market ends
                                                                                                                    • Companies and Mortgage Products

                                                                                                                      • Key points
                                                                                                                        • Allied Irish Bank (AIB) Group
                                                                                                                          • Bank of Ireland (BoI) Group
                                                                                                                            • EBS Building Society
                                                                                                                              • Group Santander
                                                                                                                                • Danske Bank Group
                                                                                                                                  • KBC Bank
                                                                                                                                    • Irish Nationwide Building Society
                                                                                                                                      • Permanent TSB
                                                                                                                                        • Ulster Bank
                                                                                                                                          • Halifax Bank of Scotland
                                                                                                                                            • Nationwide
                                                                                                                                              • Barclays/Woolwich
                                                                                                                                              • Channels to Market

                                                                                                                                                • Key points
                                                                                                                                                  • Borrowers going direct
                                                                                                                                                    • Face-to-face business is best
                                                                                                                                                      • Figure 20: Banking/personal finance activities conducted online, NI and RoI, September 2009
                                                                                                                                                  • Consumer Ownership

                                                                                                                                                    • Key points
                                                                                                                                                      • Mortgage ownership adjusts
                                                                                                                                                          • Figure 21: Mortgage ownership, NI and RoI, 2004-09
                                                                                                                                                          • Figure 22: Mortgage ownership taken out in the last 12 months, NI and RoI, 2004-09
                                                                                                                                                        • Mortgage equity withdrawal on the increase
                                                                                                                                                          • Variable rates attractive to borrowers
                                                                                                                                                              • Figure 23: Proportion of adults with tracker mortgages, NI and RoI, 2005-09
                                                                                                                                                            • Is repay the only way?
                                                                                                                                                              • Borrowers are demographically diverse
                                                                                                                                                                  • Figure 24: Mortgage ownership, by socio-economic group, NI and RoI, 2009
                                                                                                                                                              • Consumer Motivation

                                                                                                                                                                • Key points
                                                                                                                                                                  • Mortgages a captive market
                                                                                                                                                                    • Consumers increasingly averse to debt…
                                                                                                                                                                      • …but more borrowers are extending their loans
                                                                                                                                                                          • Figure 25: Proportion of borrowers having increased mortgage value since first taken out, RoI, 2004-09
                                                                                                                                                                        • Savvy customers challenge lenders
                                                                                                                                                                            • Figure 26: Agreement with selected statements relating to finance, NI and RoI, 2007-09
                                                                                                                                                                            • Figure 27: Agreement with the statement ‘I look with interest at advertising for financial services’, NI and RoI, 2007-09
                                                                                                                                                                        • Consumer Target Groups

                                                                                                                                                                          • Key points
                                                                                                                                                                            • NI target groups
                                                                                                                                                                              • Figure 28: Consumer typologies, NI, 2009
                                                                                                                                                                            • Blasé Borrowers
                                                                                                                                                                              • Astute Parents
                                                                                                                                                                                • Financially Unsure Fledglings
                                                                                                                                                                                  • Mature Debtors
                                                                                                                                                                                    • RoI target groups
                                                                                                                                                                                      • Figure 29: Consumer typologies, RoI, 2009
                                                                                                                                                                                    • Canny Nesters
                                                                                                                                                                                      • Uncertain Singles
                                                                                                                                                                                        • Savvy Seniors
                                                                                                                                                                                          • Blasé Borrowers
                                                                                                                                                                                          • Appendix

                                                                                                                                                                                            • Market segmentation
                                                                                                                                                                                              • Figure 30: Segmentation of the mortgage market, by volume, RoI, 2006-09
                                                                                                                                                                                            • Consumer ownership
                                                                                                                                                                                              • Figure 31: Mortgage ownership, by demographic breakdown, NI, 2009
                                                                                                                                                                                              • Figure 32: Mortgage ownership, by demographic breakdown, RoI, 2009
                                                                                                                                                                                            • Consumer target groups
                                                                                                                                                                                              • Figure 33: Consumers who agree with various statements relating to finance, by consumer typologies, NI, 2009
                                                                                                                                                                                              • Figure 34: Consumer typologies, by demographic breakdown, NI, 2009
                                                                                                                                                                                              • Figure 35: Consumers who agree with various statements relating to finance, by consumer typologies, RoI, 2009
                                                                                                                                                                                              • Figure 36: Consumer typologies, by demographic breakdown, RoI, 2009

                                                                                                                                                                                          Mortgages - Ireland - September 2010

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