Tuesday 20 February 2018

Drop in lending to Irish households as mortgage market sees €327m decline

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Donal O’Donovan

Lending to Irish households fell in February, including a €327m decline in the mortgage market.

While 2015 had been touted as a likely year of recovery for lenders, that trend looks to have been disrupted in part by lending restrictions introduced by the Central Bank last year.

The latest figures from the Central Bank show that total mortgage loans declined at a rate of 2.4pc in the 12 months to February.

Households repaid €1.9bn more than they borrowed in the period.

The figures show Irish banking remains in decline.

The assets of the Irish banking system, including all loans issues, shrank by €2bn in February, if lending to international entities is excluded.

If lending by banks in the IFSC is included overall lending grew by €11bn, however.

Loans for house purchases make up by far the biggest share of retail lending within Ireland, but repayments of personal loans also outstripped new lending by €48m.

Unsurprisingly, given the lack of new lending, banks now hold €3.6bn more in household deposits than they have outstanding in loans.

That suggests banks are lending at less than their capacity, and contrasts with the opposite extreme in early-2009 when household loans exceeded deposits by €53.5bn.

Most of that cash is being kept on deposit at overnight and short term rates.

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