Mortgage Market
Date: 09-08-2005
Source: IFG Group plc
Mortgage Market growth figures disguise huge leap (66%) in Remortgaging
The re-mortgaging segment has the potential to capture 40% (currently 25%) of the total mortgage market within three years. In monetary terms, this represents an increase of €2 billion in re-mortgage market size
IFG, Ireland’s largest independent mortgage group , has today ( July 8 th 2005) issued figures indicating that Irish consumers are adopting the financing habits of their UK cousins, where remortgaging accounts for almost 60% of the mortgage market. While the demographics of the two countries are significantly different, a number of findings by IFG Ireland suggest that this trend is likely to continue.
- Overall cheque issued business at IFG’s mortgage intermediary, Mortgage Broker Solutions, is up over 39%, well ahead of the estimated market at 21%.
- The re-mortgaging element of the business has increased by 66%.
- IFG’s title insurance subsidiary, First American, has also grown significantly with volumes up 37%.
- Combined figures for both businesses during the first 6 months of the year amount to in excess of 7,000 issued mortgages with a transaction value of over € 1.2bn .
The growth in the number of remortgages is likely to continue as an increasing number of consumers opt to reduce their outgoings by remortgaging their debt through mortgage consolidation and release of equity in existing properties for home improvements and holiday home purchases. As IFG is the largest independent authority in the mortgage market, their results tend to mirror general activity in the market segment.
Commenting on these significant findings, Trevor Grant, MD, Property Division IFG Ireland said,
“We expect the remortgage market to grow exponentially, potentially eclipsing the purchase market over the next 10 years. This sector of the mortgage market has traditionally been dominated by the independent mortgage brokers. We anticipate that this will continue as individual lenders simply aren’t focussed on providing the packaging needed to facilitate many of these customers.”
Re-mortgaging market trends
- With the slowdown in the buy to let market here in Ireland, a greater proportion of investors are re-mortgaging their existing Irish properties to finance overseas properties, particularly those outside the euro zone.
- Similarly many homeowners are choosing not to move, but to extract equity from their home to make a lifestyle purchase holiday home either in Ireland or abroad.
- The consistent increase in property prices seems to have resulted in a relative reduction in the number of properties for sale as more and more people choose to stay where they are and extend or remodel their homes.
- Debt consolidation is also up with consumers choosing to wrap all of their more expensive debts under a mortgage umbrella availing of an interest rate of circa 3%, often selecting dual repayments terms.
- Applications continue to grow in size with an average level of €165,000 reflecting the increasing costs of trading up or building on an extension.
- The proportion of re-mortgage clients using First American’s product “Quickswitch”, the unique title solution designed specifically for the growing trend in Re-Broking and remortgaging Mortgages, is also up 37% on the same period in 2004. It invariably saves cost and is extremely effective at expediting the Re-Mortgage process.
Number of mortgage applications soar
- IFG issued mortgage business is up over 39% (compared to an estimated market average of 21%) in the first 6 months.
- IFG now leads the Independent mortgage intermediary market with the widest range of Mortgage solutions available on the Irish market and an overall market share of 7.5% and 26% of the intermediary market.
- The number of Independent Mortgage Brokers joining the IFG’ unique support network continues to increase. It now stands at in excess of 120, representing over 25% of the Independent Mortgage market.
Note to editor:
Mortgage brokers, since their formation in 1994, have captured approximately one third of the mortgage market in eleven years. This growth is not expected to slow any time soon. There are approximately 350 mortgage brokers in Ireland which remains a growing market when compared with other markets. In the UK and the US, 50% and 66% of all mortgage transactions are processed through mortgage brokers.
IFG is Ireland’s largest independent wholesale and retail mortgage network, providing innovative support solutions to Ireland’s Independent Mortgage Brokers. IFG’s Property Division was initially established in 1991 as a Retail Mortgage Broker providing services directly to the consumer. The business has grown rapidly since inception, leading the Broker market with a 26% share, with an overall Mortgage market share of 7.5%. IFG’s wholesale mortgage division MBS is jointly owned by IFG Group Plc and GE Money. The annualised increase in mortgage drawn down over the past 5 years was over 30%.
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