[1/3]An Allied Irish Bank (AIB) worker cleans the outside window of a branch of AIB featuring an advertisement offering mortgage appointments in Dublin, Ireland, March 1, 2021. REUTERS/Clodagh Kilcoyne/File Photo
DUBLIN, June 27 (Reuters) – The value of Irish mortgage approvals for home purchase rose 17% year-on-year in May, industry data showed on Tuesday, suggesting higher interest rates have so far done little to dent demand for housing in the fast-growing economy.
Demand was again driven by first-time buyers – who benefit from looser mortgage-lending limits and a range of government subsidies – with May representing the busiest month for first-time buyer approvals in volume and value terms since the series began in 2011, the Banking and Payments Federation Ireland said.
Approvals for purchases are up 11% year-on-year across the opening five months of 2023, the data showed. A sharp decline in refinancing activity following a rush to lock in lower rates a year ago pushed approvals across all categories 4% lower.
The weighted average interest rate on a new Irish mortgage rose slightly above the euro area average to 3.63% in April from November’s multi-year low of 2.57% following a rapid rise in European Central Bank rates, Irish central bank data showed.
However a decade-long under supply of housing means multiple buyers, on average paying far more in rent that on a prospective mortgage, are still competing for the same properties at a time of strong economic growth and record low unemployment of 3.8%.
While house price growth has slowed significantly in recent months, prices were still up 3.6% year-on-year at the end of April.
“ECB rate hikes have had little impact on housing demand. Ireland’s buoyant labour market, evident in rapid jobs creation and robust pay growth is adding impetus to house prices,” Davy Stockbrokers Chief Economist Conall MacCoille said in a note.
Reporting by Padraic Halpin; Editing by Christina Fincher
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