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Household debt falls to 14-year low – Central Bank

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Stock photo: GETTY

Stock photo: GETTY

Getty Images

Stock photo: GETTY

Household debt has fallen to a 14-year low as increased disposable income is being used to pay down mortgages and credit card bills.

The Central Bank’s latest quarterly accounts for Ireland find that household debt fell by €176m in the third quarter of 2019 to €135bn, a level last seen in mid-2005. The bank said this equates to €27,453 per man, woman and child in the State.

By contrast, the bank found, our average net worth continues to test new heights, driven by investment and property gains.

Households’ net worth rose by 2.5pc to a new high of €800bn - that’s €162,577 per person - as financial assets including pension schemes gained €11.5bn in the quarter amid a surging US stock market. The value of housing rose by €8.2bn to €545bn, its highest mark since 2008.

Personal debt levels peaked at €202bn that year, when the Celtic Tiger collapsed amid the international banking crisis. They since have fallen by a third.

The Central Bank attributed the continuing post-crash rundown of personal debts in part to a €1.4bn increase in disposable incomes over the previous year and the regulator’s tight rein on lending rules for mortgages. It said the level of household debt as a proportion of disposable income fell by 1.6 points to 115pc.

Households reduced new investment in insurance and pension schemes, which fell by €148m over the quarter to €657m. Despite the prevailing minuscule returns on bank deposits, much of that money instead went into cash savings, which rose by €110m to €1.7bn, their highest level since 2007.

The national debt, meanwhile, declined in the third quarter by €1bn to €232bn.

Online Editors