The housing stock crisis is likely to continue for years.
That’s why a leading mortgage broker is calling on the country’s eight main lenders to increase the mortgage approval timeframe from six to 12 months.
Joey Sheahan of MyMortgages.ie says swathes of borrowers are getting two or three mortgage approvals from lenders because of the time lag between their initial approval and finding a property.
“The most recent BPFI statistics showed that there were 5,355 approvals in May 2022 alone – 2,640 of which were for first-time buyers,” he said.
“From what we’re seeing on the ground, there’s a probability that up to 40% of these applicants were also approved for a mortgage in the last 12-24 months, but have not been able to find a suitable property in the intervening period. The volume of these reapplications could be reduced and could significantly lessen the workload of both borrowers and lenders alike, and could, in many cases, result in quicker turnaround times for mortgage approval in the market overall.”
Sheahan says that only around two-thirds of the €1.45bn approved in May is likely to be drawn down, based on the current approval process and lack of housing supply.
Some estate agents ‘won’t allow borrowers to view properties’ without mortgage approval
“The dearth of supply of housing in this country is likely to be with us for many years to come, unfortunately,” he added.
“In the meantime, we have to look at other ways of alleviating the stresses of potential purchasers, and expediting the process, where possible, for those who are fortunate enough to be in a position to buy.
“If banks were to introduce a 12-month approval as standard, which some banks previously offered, it would have a significant impact on the marketplace. Some estate agents won’t allow borrowers to even view properties if they do not have a current approval, meaning that borrowers are forced to keep renewing their approval.”
Sheahan believes there’s no impediment to banks offering a 12-month approval:
“There would be no risk to lenders because prior to issuing a loan offer, which is the formal contract between the lender and the borrower, the bank can always request an update from borrowers on any change of employment or other circumstances in the interim that would have a negative implication on their financial status. Mortgage approval is always subject to change prior to draw down”.