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Families 3pc better off as debts reduced

THE wealth of households increased last year, the Central Bank said yesterday.

The findings are likely to come as surprise to many people as they grapple with income tax changes, higher health insurance premiums and the prospect of mortgage rises.

The bank said that efforts by households to pay down their debt meant net wealth was up 3pc. Its figures, which exclude property, show that the net financial wealth of households reached €20,745 per head in July, August and September last year.This was up 59pc from the start of 2009.

Net financial wealth is defined as the difference between financial assets and liabilities.

The rise in the wealth of households is mainly due to the fact that debts that were run up before the crisis are being paid off.

It also reflects better performances for investments and pensions last year as international stock markets rose. Net financial wealth increased by 3pc during the third quarter of last year to reach €93bn.

The net lending of households increased in the third quarter of 2010, reaching almost €4bn, its highest level to date.

The increase in net lending has been driven in part by investment by households in financial assets, but also largely by a reduction in household liabilities.

The high household net lending figures indicate that saving continued to be high in the latter half of last year, the Central Bank said.

The non-financial corporate sector has grown substantially since 2002.

However, the Central Bank said the stock of financial assets had fallen for the first time since the start of 2005. Total financial assets now stand at €96bn, a fall of nearly 2pc from the previous quarter.

Total liabilities also decreased, as the sector shows signs that it may be undergoing a process of deleveraging, through incurring fewer liabilities and some loan write-offs.

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