House price surge is forcing first-time buyers to borrow more as typical mortgage approval is now €294,800

New figures for last November show the typical new buyer is now getting approval to borrow €294,836 – €19,000 more than the same month the previous year.

According to the data from the Banking and Payments Federation of Ireland, the number of new buyers continues to increase and has hit a record.

A total of 30,500 new buyers were approved in the year to last November, the highest number since the banks started recording the figures in 2010.

However, the rate of increase has eased off because the mortgage market has been hit by a succession of interest rate rises and it continues to grapple with an acute shortage of properties to buy.

Figures released this week by MyHome.ie show that annual asking prices were up 4.1pc last year nationwide, despite a dip in asking prices in the first half of the year.

A sharp rise in the number of individuals and couples earning more than €100,000 is now sustaining first-time buyer activity.

The State’s Help to Buy and First Home schemes are also boosting new buyers.

First-time buyer activity remains strong, but the overall mortgage market contracted in the year to November, the Banking and Payments Federation said.

The total number of ­mortgages approved fell by 23pc year-on-year, largely driven by lower switching levels, the banks and other lenders said.

A total of 4,202 mortgages were approved last November. Six out of 10 of these were first-time buyers. Movers accounted for one in five approvals

The number of mortgages approved fell by 1.7pc in November compared with the previous month. It was down 23pc compared with the same period last year.

Remortgage and switching activity fell by 75pc in annual terms.

Higher mortgage rates have discouraged people from switching their mortgages.

Brian Hayes, Banking and Payments Federation chief executive, said: “Our latest figures reveal that mortgage approvals for first-time buyers (FTBs) reached historic highs once again, with 30,550 FTB mortgages valued at more than €8.8bn approved in the 12 months ending November 2023, the highest volume and value since the series began in 2010.”

He said this reflected sustained upward mortgage activity by first-time buyers throughout last year.

Mr Hayes said we may be starting to see moderation in the growth of FTB approvals, with the year-on-year increase in FTB volumes up by just 1.7pc.

“However, the values of FTB approvals rose by 8.6pc, reflecting higher housing prices as the average FTB mortgage value reached €294,836, some €19,000 more than in November 2022 (€275,957) and the second-highest value recorded since our data series began,” he said.

Mr Hayes added that although there were strong numbers of first-timers borrowing to buy a home, there had been an overall slowdown in activity.