Mortgage lending growth hits 22-year low
THE slump in the housing market continued in September, with the growth in mortgage lending the lowest in 22 years.
Figures from the Central Bank show that the amount of home loans rose by 8.5pc compared with the same month last year. That was the smallest increase since September 1986.
In money terms, the €736m lent in mortgages during the month compares with more than €2bn a month during the peak of the boom.
The Bank itself was looking on the bright side, saying the figures showed that the housing market remains "active."
Geoff Tucker, economist at leading estate agents Hooke & MacDonald, said tighter lending and potential buyers' unwillingness to make a move were combining to keep down the level of house sales.
He calculates that house prices are already 30pc below their peak, and says the much lower figures thrown up by surveys of actual sales may be damaging the market.
"People see these surveys saying prices are down 10-12pc, and they think they'd better wait. But they are actually down much more than that. The expected rate cuts by the ECB from next week will make houses very affordable again."
But banks will keep lending tight as they struggle to repair their own business, he said. "Mortgage finance has really tightened for investors. Banks are more willing to lend to first-time buyers, up to 92pc of the price. But they are more strict about income and the type of income involved -- whether it includes things like bonuses and commissions."
The growth in debt on credit cards fell back to single figures for the first month since April. The €3.1bn outstanding on cards was 9.3pc higher than the figure for September last year. The number of credit cards on issue was 5pc more than last year and levels of credit card spending were higher than in August.
This is also a rapid slowdown from the 18pc annual increases last year. "The slowdown in credit growth is symptomatic of a consumer sector that has become increasingly more cautious in recent months," said Alan McQuaid, economist at Bloxham Stockbrokers.
"The prospects for the next 12 months don't look much better -- indeed, if anything, they are worse. Even the expected cuts in interest rates are not enough, in our view, to push credit growth higher, given the deteriorating labour market outlook."
The figures show that total borrowing, including that by companies, was up 11pc. In a sign of weak economic activity, money supply fell for the sixth month in a row. The 6.8pc drop in September, compared with last year, contrasts with an 18pc increase in the previous 12 months.
- Brendan Keenan
