Household lending falls despite surge in loan approvals
LENDING to households fell again last month, indicating that difficulties remain in the banking sector.
There was a fall of almost 4pc in October compared with the same month last year, the Central Bank said yesterday.
The rate of fall-off in lending has remained unchanged from the rate of decrease recorded for August and for September.
Lending for house purchases was down by €514m on an annual basis in October, while lending for consumption and other purposes decreased by 8.6pc over the same period.
The Central Bank said that October's developments were driven by a decline in loans for consumption and other purposes of €331m, while loans for house purchases decreased by €184m during the month.
Yesterday's figures showing a fall-off in property lending came despite banks saying there has been a surge in mortgage applications granted by them.
A total of 1,677 people got letters from their banks in October telling them they had been offered a mortgage, the Irish Banking Federation said.
This is 10pc higher than the number of home loans approved in September this year, the banking lobby said after launching a new survey of mortgage approvals.
The Central Bank said there had been a rise in the annual rate of change for deposits in October.
Private sector deposits increased by 2.4pc over the year, compared with an annual rise of 1.8pc at the end of September.
Households held €92.5bn in deposits in banks regulated here. Economist with Merrion Stockbrokers Alan McQuaid said that although there had been some sign of improvement in the deposits side in the past few months, the ongoing underlying message from the Central Bank data was still one of overall weakness and difficulties in the banking sector.
"Ireland remains a long way from where it wants or needs to be as regards credit supply and demand to get the domestic economy moving again.
"The reality is that until the banking sector crisis is fully resolved and the labour market improves, the supply and demand for credit will stay subdued, severely hampering the recovery prospects for the economy as a whole in the process," Mr McQuaid said.