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Mortgages - Ireland - March 2014
Introduction
 
The Irish mortgage market of 2014 is very different to that of the pre-recessionary years. Aside from a dramatic decline in the value of outstanding mortgage loans, the volume and value of mortgage loans on an annual basis are a mere fraction of what they were in the economic boom years. Although there are now tentative signs of an awakening – consumers are once again interested in taking out mortgages, and lenders seem once again to be interested in issuing mortgages – it is highly unlikely that recovery will see a return to former patterns. A new approach to risk and lending has permeated the entire industry, and this looks set to become a central, defining feature of the mortgage industry going forward.

This report examines the factors impacting upon the supply and demand in the mortgage market in NI and RoI. Drawing on exclusive consumer data, it analyses ownership of mortgages among Irish consumers, Irish consumers' mortgage application intentions for the coming 12 months and also consumers' general attitudes towards mortgages and several mortgage-related issues.

Key themes in the report
●	What are mortgage ownership levels among Irish consumers? – How many Irish consumers own mortgages? Is ownership higher or lower among any particular demographics? What types of mortgages do consumers own?
●	What are Irish consumers' mortgage application intentions for the months ahead? – Do Irish consumers intend applying for mortgages in the coming 12 months? If so, what sort of mortgages do they intend applying for?
●	What are Irish consumers' general attitudes towards mortgages and mortgage-related issues? – Do consumers think now is a good time to buy property? Would they be able to get a mortgage at the moment? Is there a preference for dealing with brokers/advisers or dealing directly with banks? What are consumers' thoughts on arrangement fees and interest rates? Are consumers positively inclined towards fixed rate mortgages? How do consumers feel about switching providers? Are consumers planning on making overpayments on their mortgage?

Mintel reports of relevance include:

●	Current Accounts – Ireland, January 2014
●	Consumers and Retail Banking – UK, October 2013
●	Irish Lifestyles – Ireland, September 2013
●	Online and Mobile Banking – Ireland, September 2013
●	Credit Products – Ireland, August 2013
●	Packaged and Current Accounts – UK, July 2013
●	Insurance – Ireland, May 2013
●	Mortgages – Ireland, March 2013
●	Savings – Ireland, January 2013

Data Sources
In compiling this report, Mintel has gathered data from separate NI and RoI sources (eg NISRA,

CSO). In some cases, therefore, it has not been possible to provide comparable data for each region. For the purposes of this report:

●	Ireland or IoI refers to the island of Ireland.
●	NI refers to Northern Ireland.
●	RoI refers to the Republic of Ireland.
●	Therefore, ‘Irish consumers’ refers to both NI and RoI consumers.

Mintel also draws consumer insight from other sources:

●	Mintel’s trend database and previous Mintel reports in the UK and Ireland.
●	Exclusive consumer research commissioned by Mintel and conducted by Toluna in March 2014.

Definitions
This report discusses the factors that are driving and impeding demand for mortgages in NI and RoI. This report examines the following areas of mortgage products:

●	Mortgage – a loan for house purchase secured against the property. This category includes lending to first-time purchasers, existing borrowers transferring their existing mortgage to another property, and lending for buy-to-let purposes.
●	Remortgage – this is where a mortgage borrower redeems his/her existing mortgage with their current lender and takes out a new mortgage on the same property with a different lender.
●	Further advance – a form of additional borrowing offered by lenders to their existing mortgage customers for the purposes of home improvements or to buy a car etc. By taking out a further advance, a borrower is increasing their overall mortgage debt with the same lender.

Types of mortgage based on method of repayment:

●	Repayment mortgage – this is where the borrower pays off both the amount borrowed (ie capital) and the interest charged each month.
●	Interest-only mortgage – this is where the borrower pays off the interest charged on the loan, but not the capital. Consequently, the borrower will still need to pay off the original loan at the end of the term, for example by using an investment scheme.

Types of mortgage based on interest rate:

●	Fixed rate – the interest payments are fixed for a set period of time, after which the borrower will be moved on to another rate, such as the lender’s standard variable rate.
●	Standard variable rate (SVR) – the interest varies with the lender’s mortgage rate.
●	Tracker rate – the interest rate moves up or down by tracking an external rate, such as the Bank of England’s base rate or the European Central Bank's base rate.
●	Discounted rate – the interest rate varies with the lender’s standard variable rate, but the rate is also discounted for a set period of time.

Abbreviations
AIB | Allied Irish Bank
AER | Annual Equivalent Rate
APR | Annual Percentage Rate
BoE | Bank of England
BoI | Bank of Ireland
BTL | Buy-to-let
CML | Council of Mortgage Lenders
CPI | Consumer Price Index
CSO | Central Statistics Office
DETINI | Department of Enterprise, Trade and Investment, Northern Ireland
EBS | Educational Building Society
ECB | European Central Bank
ESRI | Economic and Social Research Institute
EU | European Union
FCA | Financial Conduct Authority
FLA | Funding for Lending Scheme
FPC | Financial Policy Committee
FSA | Financial Services Authority
FTSE | Financial Times Stock Exchange
HSBC | Hong Kong & Shanghai Banking Corporation
IBEC | Irish Business and Employers Confederation
IBF | Irish Banking Federation
ICB | Irish Central Bank
LDR | Loan to Deposit Ratio
LIBOR | London Interbank Offered Rate
LTV | Loan-to-Value
NIB | National Irish Bank
NI | Northern Ireland
NIHE | Northern Ireland Housing Executive
NISRA | Northern Ireland Statistics and Research Agency
OECD | Organisation for Economic Cooperation and Development
ONS | Office of National Statistics
PDH | Principal Dwelling House
RBS | Royal Bank of Scotland
RICS | Royal Institution of Chartered Surveyors
RoI | Republic of Ireland
SME | Small-Medium Enterprise
SVR | Standard Variable Rate
UK | United Kingdom

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