Saturday 18 November 2017

Surge in demand for loans to cover Christmas

Charlie Weston Personal Finance Editor

CREDIT unions have seen a surge in applications for loans of between €500 and €600 as households are forced to borrow to fund Christmas spending.

Families are also borrowing to pay for home-heating oil. Since last year the cost of 1,000 litres has jumped by €150.

A spokeswoman for the Irish League of Credit Unions said consumers had little choice but to borrow for the festive season.

She continued: "Credit unions have noticed a significant growth in demand for small loans since mid-November as members prepare for Christmas.

"This has accelerated considerably in the last week. We believe that this is not confined to any particular group of credit unions, as the same reports are coming from credit unions all over the country."

The league has called on the regulator for the sector, James O'Brien, to ease up on the lending restrictions during December. Some 300 credit unions have some form of lending restriction imposed on them.

There are just over 400 credit unions in the State.

In some cases, credit unions are only allowed to loan out €100,000 a month, which means that members with good repayment histories are being turned down for loans.

The league has warned that moneylenders will prey on people who are unable to get loans from their community lender because of the current lending rules.

Splurge

Reports of higher demand for loans tally with recent research released by the League of Credit Unions which showed that four out of 10 adults expect to end up in debt to fund the Christmas celebrations.

And it will take some people up to seven months to pay back what they have borrowed to buy presents, food and drink, the survey showed.

Women are more likely to run up debts than men.

The average spend per adult is set to be €562 per adult. This ties in with a recent report from consultancy firm Deloitte, which found that the average household will spend €941 on Christmas. Most households have two adults.

Irish people are set to top the spending league in Europe.

Most people will be forced to dip into their savings to fund the seasonal splurge and one in 10 are set to use their credit cards, the survey commissioned by the Irish League of Credit Unions indicates.

Others are set to borrow from credit unions and from moneylenders.

Irish Independent

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