By Eamon Quinn
DUBLIN--The number of new home loans Ireland's banks advanced in the three months to June was almost flat from a year ago, and the value of those loans fell slightly, data from industry group, the Irish Banking Federation, showed Friday, suggesting that a strong recovery in prices for the country's residential homes market from its six-year slump remains uncertain.
Recent evidence of a pick up in house prices appears to have been led by cash buyers, but any sustained recovery will require a return to a healthy home loans market and the IBF figures don't yet suggest such, said Alan McQuaid, chief economist at Merrion Capital.
The IBF said banks advanced 3,229 home loans, worth 518 million euros ($688 million), for customers to purchase residential properties between April and June, only four more than the 3,225 loans, worth EUR524 million, that Ireland's largest banks had advanced in the same period a year earlier.
Government data released last month showed Irish home prices rose for the third consecutive month in June, and posted their first annual increase since January 2008, providing hope that the worst of the country's five-year long housing slump is beginning to ease. However, home prices country-wide remain 50% lower than at their 2007 peak, marking one of the largest declines recorded worldwide.
The IBF said that the number of loans advanced was much higher than the 2,068 mortgages advanced in the previous three month period, but that number was the smallest ever recorded since lenders started compiling the data eight years ago.
The IBF is the industry group for most of Ireland's largest banking groups, including Bank of Ireland PLC, Allied Irish Banks PLC, Permanent TSB and Ulster Bank Limited, a unit of the U.K.'s RBS.
Ireland's government and its international bailout creditors watch home loans and home prices for signs the economy is recovering from its banking and fiscal crisis. The country's banks need the property market to recover strongly after the country came close to bankruptcy when its property market crashed from 2008.
The lenders helped fuel an unsustainable home and commercial property boom that topped out at over 203,950 residential home loan mortgages that were worth a total of EUR39.87 billion in annual new mortgage lending at the height of the lending frenzy in 2006.
The government says it is very confident that it will resecure full access to market funding when the European Union and International Monetary Union disburse the last of the bailout loans at the end of this year.
Write to Eamon Quinn at eamon.quinn@dowjones.com
