Strict mortgage lending rules spark threefold rise in household savings
Household savings have risen threefold due to younger people being forced to save for large deposits to qualify for a mortgage.
Total household savings shot up to €95bn, a rise of €3bn over the past year, new figures show.
Families had been saving furiously when the downturn hit between 2007 and 2009. Then they eased off from 2012, with savings levels falling back to pre-crisis levels. But new figures from the Central Statistics Office show that householders are back saving hard again.
The figures show that total savings increased by 128pc in 2015.
Director of research at estate agency Savills Ireland, John McCartney, said the rise in savings was likely to be down to the tighter rules imposed by the Central Bank.
"Since the start of 2015 new mortgage rules mean that home buyers can borrow less. Therefore they have to save bigger deposits.
"In this context, it is not surprising to see a rise in household savings," he said.
Dr McCartney said total savings had risen threefold between the end of 2014 and 2015.
Given the fact that deposit rates had fallen by 11pc in the past year and were at historic lows, he said savers were certainly not being attracted by generous returns.
Nor are they fleeing into safe havens because of anxiety. GDP (gross domestic product) growth is currently running at 9.2pc per annum - this exceeds the fastest growth that was experienced even during the boom, he said.
"In this context the most likely explanation is that first-time buyers, and their parents who are increasingly providing financial assistance, are saving more to fund home purchases."
Central Bank statistics show that household money on deposit in the Irish banks has risen from €92.2bn to almost €95bn over the past 12 months.
Meanwhile, the Department of Social Protection said it was now offering casual workers who get social welfare payments the option of having money they receive paid directly into their bank accounts.
It said this was in line with the National Payments Plan, which aims to cut the use of cheques.