Lending to the private sector surged last month, with new figures pointing to a 25 per cent jump in credit over the past year.
Monthly statistics released by the Central Bank show that lending to the private sector - both consumers and businesses - is now growing faster than at any point since 2000.
Irish residents owed some €178 billion to banks and building societies at the end of June, up from €175 billion a month earlier and from €148 billion at the same stage of 2003.
Even when a skewing base effect of €750 million due to a 2003 securitisation is excluded from the numbers, the growth rate remains notably robust.
A particular feature of this strength comes in the uptick in lending to businesses, which accounted for almost two-thirds of the June growth in non-mortgage credit. Loans other than mortgages grew by 20.7 per cent, year-on-year.
This compared to annual growth of 18.9 per cent in the previous month.
This increasing willingness of businesses to borrow sits well with a range of statistical releases pointing to increasing economic buoyancy.
A further breakdown of the figures shows that demand for mortgages continued to grow strongly last month, although the rate of expansion eased on the previous month from 27.5 to 27.3 per cent.
The Central Bank said growth in the mortgage market had been "remarkably stable" in the past year, expanding by about €1 billion per month.
In June alone, the value of outstanding Irish mortgages climbed by €1.3 billion.
The value of term loans rose by almost €900 million, while loans with terms of less than a year grew by €297 million.
Balances in Special Savings Incentive Accounts expanded by €134 million to €4 billion in June.
Mr Alan McQuaid, chief economist with Bloxham Stockbrokers, said the figures would be unlikely to provide much comfort for the Central Bank, which has repeatedly expressed concern over credit growth. The mortgage market is seen as particularly vulnerable to economic shocks.
"With employment prospects favourable and interest rates remaining low, the likelihood is that credit demand will continue to rise in the short-term at least," he said.
Mr McQuaid believes Irish credit growth will remain three to four times higher than the euro-zone average.
"Although interest rates have bottomed, the move upwards is likely to be a gradual process, and as such we continue to see high double-digit private-sector credit and mortgage lending growth for the foreseeable future."
