Tighter lending rules and declining demand amid falling property prices and higher bank funding costs have brought activity in the mortgage market in value terms below levels last recorded in 2005, according to statistics pooled by the State’s mortgage lenders.

Just over 35,000 new mortgages worth €7.5 billion were advanced in the second quarter of the year, compared with 41,000 mortgages worth €8.7 billion during the same period last year.

Some 63,000 new mortgages totalling €13.8 billion were advanced in the first half of this year compared with 79,000 worth €16.5 billion during the first six months of 2007.

The first-time buyer and trading-up sectors of the mortgage market showed the biggest declines in the first six months as nearly all lenders raised interest rates and changed their rules, seeking large cash deposits from new borrowers.

However, the rate of decline on first-time mortgages slowed in the second quarter compared with the first three months.

The first-time mortgage market is down 28 per cent in the first half of the year on last year, while the trading up share of the market fell 26 per cent.

Although the market is traditionally quieter in the first quarter, the value and number of new mortgages rose in the second quarter compared with the first three months of the year.

These latest mortgage statistics are likely to be confirmed in the coming weeks when the Irish Banking Federation and accounting firm PricewaterhouseCoopers (PwC) publish their official report for the second quarter of the year.

Banks and building societies advanced 28,500 mortgages worth €6.2 billion in the first three months of the year, down 19.7 per cent in value terms on last year.

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