Irish consumer sentiment crept up in April despite political deadlock and global uncertainty, while the number of new mortgages is down on last year, according to figures released yesterday.
Sentiment rose to 102.7 from 100.6 in March, according to the index compiled by KBC Bank Ireland and the Economic and Social Research Institute (ESRI).
“The fractional rise in the index in April shouldn’t be interpreted as signalling a notable change for the better, but it does suggest that Irish consumers are not gripped by a newly returned pessimism,” Austin Hughes, KBC chief economist, said.
“Instead, the mixed results of recent months suggest many consumers are struggling to make sense of an unclear economic environment,” he added.
Mr Hughes said consumers were concerned by the state of the global economy and the risk, acknowledged by the Irish government, of Britain’s referendum on whether to leave the EU.
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Meanwhile, new data about the mortgage market published by the Banking and Payments Federation Ireland (BPFI) shows that 5,446 new mortgages, totalling €1.01 billion were drawn down during the first quarter of this year.
While the total value is up 2.5 per cent compared with the same period last year, the number of mortgages is down 3.1 per cent, a fall which analysts blame on the Central Bank’s new mortgage rules.
Since March last year, applicants must raise a deposit equivalent to 20 per cent of the property value. For first-time buyers purchasing a property worth less than €220,000, the requirement falls to 10 per cent.
The latest figures suggested first-time buyers were the hardest hit by the new rules, as 14 per cent fewer drew mortgages compared to the same period last year, and the total value borrowed fell by 8 per cent.
The Central Bank is due to publish a review of mortgage rules in November this year, and annually thereafter. It invited the public to submit their views, but has asked for “evidence-based analyses” rather than simple statements of opinion.
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According to Dermot O’Leary, the chief economist at Goodbody, the mortgage data is affected by a a lending boom in first quarter of 2015, as buyers raced to beat the new rules. However he still expects modest growth in lending for the year as a whole.
Conall Mac Coille, the chief economist at Davy, said that lending was “surprisingly resilient”, albeit reflecting remortgaging activity rather than new buyers.
“There were 9,439 residential property market transactions in the first quarter of 2016, of which mortgage loans financed 4,664, or just 49.4 per cent. With rental yields currently 5 to 6 per cent, residential property is still an attractive asset for many investors. Nonetheless, transaction levels are still only equivalent to 2 per cent of the housing stock per annum, roughly half UK levels and implying the average home is sold once every 50 years,” he added.