Mortgages - Ireland - August 2007

Table of Contents

• Issues in the Market
• Key themes of the report:
• Definitions
• Conversion factors
• Abbreviations
• Market In Brief
• Interest rates will slow the market
• Mortgage lending triple in RoI to €25 billion
• Mortgage lending in NI reaches €2.1 billion
• Short term growth lies in desire to remortgage
• Housing reaching the limits of affordability
• Is the property market boom over?
• Strengths and Weaknesses in the Market
• Internal Market Environment
• Key Points
• Fewer FTBs to drive the market
  • Figure 1: proportion of FTBs to house sales, NI and RoI, 2000-06
• Means fewer fresh links in the chain
  • Figure 2: Number of home loans made to FTBs, NI and RoI, 2001-06
• Investors pick up the slack
• Focus turns to existing homeowners
• Some FTBs seek to remortgage quickly
• The Internet: from information source to selling tool
  • Figure 3: Percentage of adults using the Internet, either at home or at work, NI and RoI, 2001-06
• Online mortgage arrangement to grow
• Sub-prime mortgages grow in RoI
• Planning laws to boost NI equity release market
• Republic says farewell to stamp duty
• Mortgages starting later
  • Figure 4: Average age of first time buyers, UK, 1974-2005
• FTBs become older...
• ...as major lifestages start later
• Potential for mortgages to end later as well
• Some consumers seek to repay mortgages early
• Mortgages as pensions
• Pension mortgages are a niche market...
• ...but investing in homes for retirement is likely to be a significant market
• Figure 5: Lending for second homes and holiday homes, RoI, 2003-07
• Brokers and intermediaries...
• ...make the market more price sensitive
• Buying abroad
• Broader Market Environment
• Key Points
• Interest rates prompt remortgaging and switching
  • Figure 6: UK and eurozone interest rates, 2001-07
• Mortgage repayments to increase...
• ...prompting a switch to fixed rate mortgages
• 50% of market unaware of interest rates
• NI economy particularly susceptible to rate rises
• Where will it stop?
• Property reaching the limits of affordability
  • Figure 7: Average property prices, RoI and NI, 2000-06
• Repossessions increasing
• Prompting lenders to be more flexible
• Political stability in NI should promote investment and property buying
• House prices growth slowing in RoI
• A growing immigrant mortgage market
• Average household getting smaller
  • Figure 8: Number of households, by size, NI and RoI, 2001-06
• Market Value and Forecast
• Key points
• Overall mortgage debt has tripled since 2001
  • Figure 11: Value of outstanding mortgages, RoI and NI, 2001-06
• Average size of loan almost doubled in RoI
  • Figure 12: Number and value of mortgage loans approved, RoI, 2001-12
• Number of homebuyers has reached its peak in RoI
• Mintel forecast explanation
• NI mortgage market needs more FTBs
  • Figure 13: Number and value of mortgage loans approved, NI, 2001-12
• Fewer FTBs slows housing market
• Will the housing market cool off?
• Low return on buy-to-let investments
• Not all doom and gloom in NI
• Slow growth, but ' growth' nonetheless
• Still growth for mortgages as consumers move to remortgaging and top-ups
• Fixed rates will continue to gain popularity
• More switching likely
• Variable rates will still be used
• Brokers to grow in RoI
• Market Segmentation
• Key Points
• FTBs vs existing homeowners
  • Figure 14: Number of mortgage loans approved, by buyer type, NI, 2001-06
• Rising prices -- decreasing FTBs
• Value still increases
  • Figure 15: Number of mortgage loans approved, by buyer type, RoI, 2001-06
• Existing homeowners
• RoI buy-to-let market
  • Figure 16: Number and value of buy-to-let loans approved, RoI, 2005 and 2006
• BTL market to slow, despite overall optimism
• NI market may grow in line with UK predictions
• RoI top-up mortgages
  • Figure 17: Number and value of top-up loans approved, RoI, 2005 and 2006
• Companies and Products
• Key Points
• Banks and building societies
• Abbey
• Allied Irish Bank/First Trust
• Bank of Ireland
• EBS Building Society
• First Active
• Halifax (Bank of Scotland)
• The Mortgage Store
• IIB Homeloans Ltd
• Irish Nationwide
• Permanent TSB
• National Irish Bank
• Northern Bank
• Nationwide
• Progressive Building Society
• Ulster Bank
• Sub-prime mortgages
• Brokers
• Channels to Market
• Key Points
• Most mortgages arranged directly with the lender
• Figure 18: How the mortgage was arranged, NI and RoI, 2002-06
• Brokers -- good or bad?
• Arranging mortgages online
• No online brokers likely
• Consumer: Ownership of Mortgages
• Key Points
• 1.57 million mortgage holders in Ireland
  • Figure 19: Ownership of mortgages, NI and RoI, 2002-06
• Property prices more prohibitive for the RoI buyer
• Marital and parental lifestages still coincide with homeownership
• Helping the bank of mum and dad
• Repayment mortgages dominate the market
  • Figure 20: Type of mortgage owned, NI and RoI, 2002-06
• More pension mortgages than meets the eye?
• Most homeowners on variable rates
  • Figure 21: Type of repayment mortgage, NI and RoI, 2002-06
• Variable rate mortgage loses popularity...
• ...reflecting a change in mortgage arrangement behaviour
• Encourages switching behaviour
• Appendix
• Regional definitions
• Population 2006
• BMRB Target Group Index (TGI) sample sizes
• Sample sizes for Millward Brown data
• Economy
  • Figure 27: Health of the economy, NI and RoI, 2002-07
  • Figure 28: House price to income ratio, NI and RoI, 2000-05
• More buyers hit with stamp duty
  • Figure 29: Stamp duty thresholds and levies, UK and NI, 2007
  • Figure 30: Stamp duty thresholds and levies, RoI 2007
• Notes on first time buyers
• Adults who have used the Internet
• Figure 31: Adult population who have used the Internet in the last 12 months, by demographic sub-groups, NI and RoI, 2006
• Population statistics
  • Figure 32: Population change by age group, NI, 2000-20
  • Figure 33: Population change by age group, RoI, 2000-20
  • Figure 34: Forecast population change, by age, NI, 2000-20
  • Figure 35: Forecast population change, by age, RoI, 2000-20
• Long-term responsibilities start later
  • Figure 36: Average age at marriage, men and women, NI and RoI, 2000-05
  • Figure 37: Average age of women at birth of first child, NI and RoI, 1991-2005
• Many potential FTBs worried about finding a foothold
  • Figure 38: Current worries of adults under 35, NI and RoI, 2006
• Employment statistics
  • Figure 39: Percentage in employment, by age group, NI and RoI, 2000-05
• Additional consumer data tables
  • Figure 40: Ownership of mortgages, NI and RoI, 2004 and 2006
  • Figure 41: Owners who have increased the value of their mortgage, NI and RoI, 2006
• Type of ownership
  • Figure 42: How the mortgage is owned, NI and RoI, 2006
  • Figure 43: Top ten things people are saving for, by age, NI and RoI, 2006