Tuesday 23 January 2018

Irish mortgage market continued to shrink in 2015, Central Bank reports

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Donal O’Donovan

The Irish mortgage market continued to shrink this year, according to the latest data from the Central Bank.

• Repayments of home loans exceeded new drawdowns by over €2bn in the 12 months to end-November 2015, meaning old mortgages are being paid back faster than new ones are being issued.

• Repayments also exceeded drawdowns by €525m for other types of household loans over the same period.

• The trend continued into November, when household loan repayments were €282m greater than the total of new debt drawn down – including to buy homes.

• The month of November recorded a decline in lending for house purchase of €315m, though other forms of household debt increased by €33m.

A predicted revival of the mortgage market failed to materialise this year, after Central Bank imposed lending restrictions hit house purchases. Double digit house price growth in 2014 moderated and reversed after the mortgage caps came into force.

Meanwhile, borrowing by businesses exceeded debt repayments in November by the biggest margin since 2011.

Loan draw downs by businesses classes as non financial corporations (NCFs) were €379m greater than repayments in the month of November – the largest difference since September 2011, according to new figures from the Central Bank.

The increase was driven by short terms loans of up-to-one year which increased by €217m and medium term borrowing for terms of one to five years,  up €274m.

The overall increase in borrowing was moderated by a reduction of €111m in long term borrowing – for five years or more.

However, while borrowing was up in November itself, repayments exceeded new debt in the 12 months to the end of the month. Lending to Irish resident NFCs recorded a year-on-year decline of 7.4pc5,  lower than the annual decline of 7.7pc in October, the data shows.

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