The number of mortgages approved by banks here fell by 3.4% in the year to the end of January, new figures show.

The drop came despite a modest monthly increase in the volume of home loans given the green light during the first month of the year.

In total, the Banking and Payment Federation Ireland figures show that 3,307 mortgages were approved during the month, with 1,479 mortgages of those going to first time buyers.

The overall value of loans for home purchases that were approved in January was €672 million, with first time buyers receiving €327 million or nearly 49% of that.

This represented a total increase in value of 2.4% month-on-month, but a drop of 2.5%year-on-year.

“Based on our conversations with industry participants at the start of the year, we would have expected some pick-up in January due to potential pent-up demand as a result of the volatility caused by banks’ attempts to manage exemptions around macro prudential rules in 2018,” said Goodbody economist, Dermot O’Leary.

“It is too early in the year to make conclusions on this. We still expect that higher levels of new housing supply to be a driver of growth in the mortgage market in 2019.”

Davy’s chief economist Conall MacCoille said the figures were disappointing. “Brexit uncertainties could be weighing on activity,” he said.

“However, given volatility in the residential transactions data, it is too early to discern clear trends,” he added.

Overall 45,548 mortgage approvals were processed by lenders in the 12 months to the end of January, with a total value of €10.109 billion.

The BPFI also published its Housing Market Monitor, which showed that there has been a reduction in cash sales and increased competition for home purchase from the non-household sector, particularly when it comes to new builds.

“In terms of transactions in the newly built housing units, non-households accounted for around 22% of all transactions in this category in 2018 compared to 7% in 2010,” said Dr Ali Uğur, BPFI’s Chief Economist.

“Given the growing importance of involvement from institutional investors and higher social housing output in the short term, it is likely that a higher portion of the new housing units in the coming years will be accounted for by these segments.”

Dr Uğur also said cash sales have fallen to 27.8% of sales in the last three months of the year from 32.2% one year earlier.

Brokers Ireland said the data point to a growing lost generation and reinforce the growing view that major behavioural change is being forced upon what should be the normal house buying public, particularly aspiring first-time buyers on average salaries.

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