Mortgage lending growth at 22 year low
House prices fell 7 percent in the first nine months of the year. Photo: David Goddard/Getty Images
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Friday October 31 2008
Irish mortgage lending advanced at the slowest pace in 22 years in September as falling house prices deterred buyers and the credit crunch restricted access to funds.
Home loans grew 8.5 percent from a year earlier, down from a 9 percent pace in August and the least since September 1986, the central bank in Dublin said today. The growth rate will probably cool to around 7 percent by year-end if the current trend persists, it said.
A decade-long property boom burst early last year after a doubling of European Central Bank interest rates, and the slump has worsened as unemployment rises and banks impose tighter lending restrictions. Ireland became the first euro area economy to slide into a recession in the second quarter.
House prices fell 7 percent in the first nine months of the year, as much as they did in the whole of 2007. The slump has contributed to a collapse in homebuilding, which helped the Irish economy expand at triple the euro-region average for almost a decade.
Mortgages grew by €736 million euros in September, which compares with a record low €508 million in August. This indicates that lending ''remains active, albeit at a much slower pace than during the peak of 2006,'' the central bank said.
Overall lending fell by €329 million in September from the previous month, partly due to an unidentified lender reclassifying the residency of some mortgages. The annual growth rate eased to 10.7 percent from 12.9 percent in August.
Excluding those factors, overall lending would have risen by €1.2 billion on the month and increased 11.1 percent from a year earlier. (Bloomberg)
- Fergal O'Brien
