The value of mortgage drawdowns grew by 40% in the first quarter of 2017 compared to the same time last year, new figures show.
Surging demand is likely to put further pressure on house prices currently posting double-digit growth.
Mortgage lending collapsed after the bursting of a property bubble in 2007.
A recovery over the last three years - that has picked up significantly in recent months - has coincided with a chronic housing shortage throughout the country.
House prices had stabilised at an annual growth rate of 4-5% last year following an initial rebound.
But they have since accelerated above 10% as an easing of Central Bank lending rules and a new Government subsidy for first-time home buyers added to the recovery.
Mortgage approvals also far outstripped drawdowns in the first three months, with year-on-year growth of 78% to €2 billion pointing to further pent up demand among buyers.
"The biggest issue in terms of these approvals translating into drawdowns is the low level of new supply," Goodbody chief economist Dermot O'Leary said.
"Approvals for new entrants is substantially more than the amount of new properties coming to the market thus the obvious conclusion is that prices will continue to be bid up. Price inflation is likely to continue to accelerate from here," he stated.
The economist said that of the 20,000 mortgages approved for first time buyers and investors in the past 12 months, only 10,000 would be met by new supply available for sale with self-builds set to account for almost half of the 18,500 homes forecast to be completed in 2017.
House prices still remain 31% below their 2007 peaks.
Central Bank Governor Philip Lane said yesterday that he did not think the market was showing the same dynamic as a decade ago.
Professor Lane said the bank's rules limiting mortgages to three and a half times a borrower's income would act as self-correcting brake to prices.
Analysts also say the mortgage market is still shy of the €10 billion of lending a year that would be considered a normalised rate.
