New figures from Banking and Payments Federation Ireland show that October was the busiest month for mortgage approvals since BPFI began compiling the numbers in 2011.

A total of 5,207 mortgages were approved in October. First-time buyers (FTBs) were approved for 3,041 mortgages, or 58.4% of the total volume, while mover purchasers accounted for 1,267 (24.3%).

BPFI said the number of mortgages approved rose by 12.7% on a monthly basis and by 15.4% compared with the same time last year.

Meanwhile, the value of mortgages approved in October amounted to €1.253 billion. This marked a monthly increase of 11.8% and an annual rise of 22.9%. 

First-time buyers TBs accounted for €774m (59.4%) and mover purchasers for €344m (27.5%) of these mortgages. 

Brian Hayes, the chief executive of BPFI, said the very strong growth in mortgage approvals during October was largely been driven by first-time buyers who made up almost 60% of both the total volume and value of approvals as uncertainty around the economy due to Covid-19 has declined. 

Brian Hayes noted that mortgage approvals are down by 19% in volume terms and 14% in value terms in the first ten months of 2020 compared with the same time in 2019.

But he said that continued uplift in approval activity in October represents a strong pipeline for drawdown activity as we move into 2021 which can help feed into an overall recovery in the economy in the year ahead.

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Brian Hayes said that there is an "insatiable demand" among first time buyers for mortgages.

Mr Hayes said that while it takes longer to ascertain a trend, there is evidence that demand has increased and is ramping up, although many first time buyers are applying to a number of lenders seeking the best deal. 

He also said that the supply of new homes is "lagging way behind where we need it to be". 

Mr Hayes also said that he could guarantee that taking a mortgage payment break is "not a blocker or the sole determinant" in accessing credit from banks. 

"If someone is coming through a payment break and over a period of months if they are back to work and managing, the bank will lend to them", he stated. 

People had been assured that taking a payment break would not affect their credit history, but May Hayes said that  mortgage lenders have to do an affordability test and make decisions "in the round".

He said that there is no black listing of employers who availed of wage supports but that under lending rules, the Central Bank expects lenders to look beyond immediate short term circumstances in determining someone's ability to borrow and re-pay.

Dermot O'Leary, chief economist at Goodbody Stockbrokers, said a record surge in savings as a result of the pandemic disruption to economic activity, and the expansion of the Government subsidy for first-time buyers of newly built homes, was helping to boost mortgage approvals.

Meanwhile, Conall MacCoille, chief economist at Davy Stockbrokers, said the average approval amount per borrower rose by 5% year-on-year to €250,000 in October.

He said this was evidence that inflationary pressure was beginning to build again in the housing market. 

Average house prices have fallen slightly since the Covid-19 pandemic began but the disruption has also hit housing supply, which has long struggled to keep up with demand.

The Government expects 16,000 to 18,000 housing completions this year, which would represent a fall of at least 15% compared to 2019 and amount to half the level the Government says is needed each year to catch up with demand. 

"With homebuilding delayed, too much money is chasing too few homes," Conall MacCoille wrote in a note.