Borrowing:After years of embracing debt and the lifestyle and retail joy it can bring to our lives, could 2006 be the year when our love affair with credit culture started to cool?

When major lenders like AIB are starting to offer gimmicks to first-time buyers such as the offer of a €2,000 "cash bonus", is it a sign that maybe the length of the queue of eager first-time buyers outside new-build property developments with deposit-sized cheques is getting shorter?

After a steady succession of six increases in the European Central Bank (ECB) base rate, some homeowners, especially those who made their big buy in recent memory, could be forgiven for feeling the pinch.

"Santa" Brian Cowen stepped in at the end of the year by announcing an increase in the maximum available amount of mortgage interest relief for first-time buyers, a move that benefits those with larger loans who are within the first seven years of their mortgage career.

But the extra €66 a month for a single person and €133 for a married couple is only partial respite for homeowners. Even with the benefit of the extra tax relief, people with a mortgage of €250,000 being repaid over 30 years at a typical mortgage rate are paying almost €150 more a month now than they were this time last year: a whopping €1,149 instead of €1,002.

More mortgage pain is forecast for 2007. The ECB interest rate, to which mortgage rates are linked, has climbed from 2 per cent to 3.5 per cent. Some economists, though not all, now believe that it will rise to 4 per cent next year, before pausing to take a bit of a breather.

On the mortgage example given above, this would take the monthly repayment to €1,357.

It would also mean that interest rates would be exactly 2 per cent above where they were last December, or around 5.1 per cent on a typical tracker mortgage, up from a mere 3.1 per cent.

Curiously, this is exactly the margin at which lenders "stress test" their borrowers to check that their incomes are high enough to withstand a 2 per cent increase in interest rates.

How any further interest rate increases might affect the ability of first-time buyers and other vulnerable borrowers to meet the escalating repayments on their properties is uncharted territory.

Many will have received salary increases under the Towards 2016 social partnership agreement. But with consumer price inflation running high - at a rate of 4.4 per cent in November - and electricity and gas hikes adding to homeowners' woes, 2007 might not be a whole load of financial fun.

So far, the industry - in the guise of the Irish Banking Federation (IBF) - says it has not seen any evidence that bad debts are rising.

But with an ever-growing list of mainstream lenders pushing to get into the "specialist" lending market, which targets people with dodgy credit ratings and/or irregular incomes, the next few years are likely to see banks and building societies helping themselves to some extra profit off the back of these so-called high-risk borrowers by charging them higher-than-average interest rates.

Third-quarter figures from the IBF and PricewaterhouseCoopers show that first-time buyers are now being squeezed out of the mortgage market, thanks largely to the affordability barrier posed by higher interest rates.

First-time buyers now account for just under 21 per cent of the value of the mortgage market, down from a 22.4 per cent share last year. And the number of mortgages taken out by first-time buyers fell from 10,062 in the third quarter of 2005 to 9,884 in the same quarter this year.

The smallest increases in the average loan sizes also occurred among first-time buyers, with average mortgages increasing by just 1.8 per cent over the period to €231,514.

The IBF / PricewaterhouseCoopers study revealed another interesting finding: the overall mortgage market is slowing down. It still increased at a "solid" 16.9 per cent between the third quarter of 2005 and the third quarter of 2006, but this is down from a rate of 20.6 per cent between the second quarters of 2005 and 2006.

As might be expected, the mortgage market is echoing similar patterns in house prices, which seem to have been only going in an upward direction since time began.

After another buoyant start to the year, the cracks in the market finally started to show in October, when the price of new homes fell for the first time in two years. That month also showed a fifth consecutive slowdown in the rate of house price growth.

Nobody is prepared to say that the property market is heading for one great big crash: predictions of soft landings are still the order of the day. But for recent buyers, especially those who have succumbed to the widespread availability of 100 per cent mortgages, the grim spectre of negative equity seems a lot closer than it did before.

Meanwhile, October also saw the growth in private sector credit slipping to its lowest level since July 2005.

Demand for credit amongst Irish consumers and businesses, though still strong, eased back to an annual rate of increase of 27.7 per cent, figures from the Central Bank showed.

But Ireland's level of private sector borrowing is still 2.5 times the euro-zone average.

Our borrowing habits may have become an addiction that's hard to shake, but the culture of shopping away money we haven't yet earned isn't going to be lost in a blaze of new year's resolutions.

Plenty of cash is still rattling around Irish pockets - at one end of the income spectrum anyway.

While the Money Advice and Budgeting Service (Mabs) has reported attracting 11,500 new clients in 2006, most of them heavily indebted, Bank of Ireland says people whose Special Savings Incentive Accounts (SSIAs) have matured are now saving more on average than the monthly maximum permitted under that scheme.

Next year will see the bulk of the 1.1 million SSIA accounts maturing, with account holders taking home an average of €15,000 each.

Such tasty lump sums might deter consumers from turning to unsecured credit to finance their every need. But the deposit-sized SSIA maturities could also provide a fresh impetus for property investors to get in the buy-to-let market while prices flatten and wait for the next boom.