Consumers are continuing to reduce debt and pay off mortgages
IRISH people are continuing to reduce their borrowings and pay off their mortgages, new figures show.
Mortgage borrowing fell by €156m in February from the previous month, the Central Bank said yesterday. The annual drop was 0.9pc.
Total lending in the past 12 months is down 7.3pc, or €1.3bn. The pace of decline in lending to businesses is accelerating, falling at an annual rate of 3.7pc in February after a 3pc drop in January.
Repayments on credit cards were around €26m higher than new spending on cards the previous month.
Finance Minister Brian Lenihan said on Tuesday that he planned to force AIB and Bank of Ireland to lend a total of €12bn over the next two years to small- and medium-sized businesses.
The demand comes as many businesses claim that they are being refused credit for no reason.
Borrowing and lending in Ireland fell off a cliff in September 2008 -- the month Lehman Brothers collapsed and Mr Lenihan was forced to rescue the banks here -- but resumed in the following three months until January 2009 when Anglo Irish Bank was nationalised.
Borrowing has been negative since then as the banks clamped down on lending and consumer confidence plunged.
The Professional Insurance Brokers' Association (PIBA), which represents 800 financial brokers, said the decline in lending to business was "very worrying for jobs and the economy" and called on the Government to boost minimum lending requirements it has set for the banks.
"There is no hiding place for the banks. These figures defy bank propaganda claiming that they are lending to small businesses and first-time buyers," said Rachel Doyle of PIBA.
"The banks cannot be relied upon to act responsibly; they will do the absolute minimum required of them by the Government. We believe the Government and the Finance Minister in particular need to act to up their minimum requirements."