Mortgage lending to increase

There seems to be more & more proof that the rate of mortgage lending is on the increase. AIB yesterday announced that its mortgage lending target for 2013 is €2bn. The bank also stated that it lent €1.2bn in mortgages in 2012, representing 45% of the market (Bank of Ireland represented about 40% of the market in 2012). This implies that mortgage lending hit €2.7bn in 2012, higher than our forecast of €2.4bn, and 12% up on the 2011 total. Bank of Ireland last week reiterated a €2bn target for mortgage lending that it made last October and has also stated that it has already received €400m in applications for this fund. Permanent TSB said they would lend €350m in mortgages this year. If targets are met, mortgage lending would reach c.€4.5bn, which is almost 70% above the 2012 estimated level. We currently have 22% growth in gross lending for the market in our numbers (to c.€3bn), so clearly there is upside if these targets are reached. Gross lending will not get back to peak 2006 levels of €40bn but positive Irish housing market trends are likely to be a major feature in 2013