Mortgage market is likely to fall back to €25bn

THE value of the mortgage market is likely to fall back to €25bn this year, from €40bn in 2006, and €34bn last year.

The fall has been blamed on the seizing up of the property market and the rise in mortgage rates.

In a briefing yesterday, Haven Mortgages said banks were trying to restrict lending, a situation which was slowing the home-loans market.

The decline in the value of the mortgage market to €25bn would represent a 25pc drop from last year's figure of just under €34bn.

A sharp reduction in housing starts was one of the reasons for the slowdown in home-loans growth. House registrations fell 77pc in the first three months of this year compared with the same period last year.

House prices fell 7.8pc in the year to February with Haven's Tony Moroney predicting another 8pc fall this year. That would mean house prices falling by 15pc from their peak in early 2007.

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