Banking and Payments Federation defend lenders as mortgage approvals increase

Banking And Payments Federation Defend Lenders As Mortgage Approvals Increase Banking And Payments Federation Defend Lenders As Mortgage Approvals Increase
Mortgage approvals increased by over 8 per cent last month according to the BPFI.
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Vivienne Clarke

The chief executive of Banking and Payments Federation Ireland (BPFI), Brian Hayes, has defended mortgage lenders in the Irish market, pointing out the latest approvals figures show another month of solid, albeit slower growth.

According to the BPFI mortgage approval report for February, a total of 3,651 mortgages were approved, increasing by 8.8 per cent compared to January, and 3.9 per cent on the same month in 2020.

Mr Hayes said this increase showed there is a significant amount of demand despite the pandemic, adding the mortgage approval figure for 2020 was 43,000, amounting to €8.5 billion, while it had been 49,000 in 2019, he told RTE radio’s Today with Claire Byrne show.

There was a clear demand for new mortgages and banks were “out there making sure people get on the property ladder.”

Last month, over half of the mortgages approved (1,969) were for first-time buyers, while mover purchasers accounted for 903 of the approvals.


The level of mortgage switching also increased to 15 per cent, which could be as a result of people having more time to do the research about moving from one product to another, Mr Hayes said.


Switching was good for competition, Mr Hayes said, but the real problem was the level of capital banks had to hold in reserve. This was a “drag factor” and put Irish mortgage providers at a disadvantage compared to providers in other European countries, he added.

There was a real challenge about enforcement and security in Ireland for lenders with a “significant majority paying for a small number” who refuse to pay or to enter into discussions. “It’s not about repossessions, it’s about solutions,” Mr Hayes said.

Ireland was "losing" banks because of the challenging circumstances they face in this country, he said. There were nine mortgage lenders in Ireland, “inevitably” if there was more competition, there would be better rates. There are factors in Ireland that make it an unattractive place to set up a bank, he claimed.

“We are paying a price for reckless lending,” Mr Hayes said, but added macroprudential rules were good and safe, and would ensure there was no going back to the mistakes of the past.

The chief executive denied mortgage lenders were using wage subsidy support schemes as a way to blackball mortgage applicants, stating: “We’re in a totally different world where precautionary rules apply.”

Banks have to take the worst case scenario and ask the question if a mortgage was going to be sustainable, he said.

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