New lending in the country reached €999m (£849m) in the final quarter of 2012 but fell 66.9% to €331m (£281m) in the first three months of 2013 according to data from the Irish Banking Federation.
The fall has been attributed to the Irish government’s decision to withdraw its mortgage interest relief programme on December 31 2012. It is thought that, similar to the end of the Stamp Duty holiday in the UK, buyers brought forward their purchases to benefit from the tax break before its removal.
This scheme had allowed borrowers in the country to reduce mortgage payments by up to 30%.
The number of transactions in the first three months of the year was just 2,068, down from the 6,043 recorded in the previous quarter and the worst start to a year for mortgage lending since at least 2006.
Earlier this year, Ireland’s finance minister Michael Noonan said that some mortgage lenders needed to increase the level of repossessions ‘in the interests of the country’.