CREDIT growth slowed a little in December, along with mortgage lending. The slowdown was very slight, however, and an acceleration looks likely for January.
According to figures released by the Central Bank, private sector credit fell to 14.9 per cent in December from a revised 16.5 per cent in November.
The growth in residential mortgage lending fell to 14.7 per cent from 17.1 per cent in the previous two months.
Mr Oliver Mangan, chief economist at Goodbody Stockbrokers, said the figures were not as impressive as they look. According to Mr Mangan, nearly all the improvement was due to Irish Life Homeloans selling off its mortgage book. Without the £200 million securitisation, the annual rate of increase in mortgage lending would have been around 16.8 per cent, while underlying credit growth would have come in at around 15.7 per cent in December.
Mr Mangan also pointed out that the delay in paying VAT receipts would also have affected deposit balances. The £119 million VAT carryover would have boosted the credit figure by 0.4 of a percentage point.
"Overall it looks as if underlying credit growth was around 16 per cent, while mortgage lending was close to 17 per cent," he said.
He added that the recent figures showing car sales growing by 20 per cent in January and tax revenue up significantly pointed to continuing strong credit growth.
While the falls will be welcomed by the Central Bank, it was still likely to hold interest rates steady, Mr Mangan said. "The Central Bank will be slow to cut rates," he said. "They will wait to see the first inflation figures."
