Irish mortgage drawdowns hit post-crash high as values rise in ‘dysfunctional’ market
The value of Irish mortgages drawn down rose to the highest level since 2008 last year, driven by first-time buyers of new homes, switchers and rising house prices in a market hamstrung by undersupply. Some €14.5 billion worth of home loans were issued in 2025, up 15.2 per cent on the year, according to Banking & Payments Federation Ireland (BPFI), the group representing the banking industry. The total number of mortgages increased at half the pace, to 46,358. The growth in the value of mortgage lending in recent years “is increasingly driven by ongoing increases in the size of mortgages as the constraints of the housing market continue to impact”, said Diarmaid Sheridan, an analyst with stockbrokers Davy. First-time buyers (FTB) accounted for about 60 per cent of activity in the market – by volume and value – last year, according to the BPFI data. READ MOREIreland’s embrace of EU-India trade deal over Mercosur boils down to one thingTrump’s Greenland pursuit is commercial not strategicWhat do ads on ChatGPT tell us about the AI race?Gold price surge reveals a pessimism about the worldOld order ‘not coming back’ as Trump overshadows World Economic Forum“A rising share of FTB mortgages were drawn down on new properties, including self-builds, in 2025, accounting for 41 per cent of the volume and 43 per cent of the value of FTB mortgages, the highest shares since 2009,” said BPFI chief executive Brian Hayes. However, FTB mortgages on second-hand properties fell for the second year in a row. This reflects wider dysfunction across the market where there is a dearth of such properties for sale, according to industry observers. Property website Daft.ie said in a report earlier this month that there were just 11,551 second-hand homes up for sale in early December – well off the average of 26,000 for the period covering 2015-2019. The Central Bank of Ireland estimates that 33,000 homes were built in the State last year, significantly below the average 50,000 homes the Government has targeted for delivery a year out to 2030 to help alleviate undersupply in the market. Irish residential property prices were rising at an annual rate of 6.6 per cent in November, according to the latest data from the Central Statistics Office. The BPFI figures show that switching activity rebounded strongly last year, rising 57 per cent by value to €1.7 billion. This had been fuelled by homeowners seeking to take advantage of a decline in home loan rates as the European Central Bank reduced official borrowing rates – following a spike between 2022 and 2023 – as inflation eased. “Looking ahead at 2026, we expect continued strong demand in the housing and mortgage markets,” said Mr Hayes. “In the short term, housing output also looks encouraging for the year ahead. However, a significant increase in the commencement activity in the first half of this year will be required to sustain output beyond 2026, given the fact that commencements of about 16,500 last year were at their lowest levels since 2016.” Mr Sheridan estimates that mortgage drawdowns will rise to €15.7 billion this year and €17.1 billion in 2027. Following more than a decade of borrowers repaying existing loans more quickly than taking on new debt, the total value of mortgages in the State started to increase in 2023. The Davy analyst estimates that the total stock grew by almost 5 per cent last year to more than €93.6 billion. S&P Global, one of the leading debt ratings agencies in the world, said on Tuesday that the Irish mortgage market – dominated by AIB, Bank of Ireland and PTSB – will likely see competition intensify this year as Revolut rolls out its planning offering. Revolut had initially targeted a launch in late 2025. The agency said that it expected domestic demand for credit – which also includes personal and business loans – to rise 3.5 to 4 per cent this year. “That said, we expect Irish banks to continue developing their wealth management and insurance businesses to further diversify their revenues and strengthen the long-term sustainability of their business models,” it added.
