Mortgage lending has continued to power ahead, with new figures for August showing financial institutions lent more than €1 billion to home-buyers.
Monthly statistics from the Central Bank of Ireland show residential mortgage lending rose to 24.2 per cent last month compared with 23.9 per cent in July.
Overall private sector credit in the economy grew by 14.6 per cent in August. This rate of growth is slightly slower than that posted in recent months, but this is largely due to the securitisation of residential mortgages by some lenders during this period, according to the Central Bank.
The continuing surge in mortgage lending is a concern for the Bank which has been warning financial institutions about the need for prudent lending as the pace of economic growth slows.
A substantial amount of new residential lending is being advanced to investors who are increasingly putting money into the property market rather than into the stock markets or other investments.
The total amount of loans advanced to customers for a period of up to one year rose by €623 million while the amount of term or revolving loans increased by €503 million.
In August, the amount of overdrafts fell, however, decreasing by €268 million.
Lending by Irish credit institutions to residents outside the public sector rose by €2.3 billion to €152.5 billion according to the Central Bank. This is a 1.5 per cent increase and is broadly unchanged on this type of lending in July.
Lending to companies at the International Financial Services Centre in Dublin was largely unchanged with the €400 million increase in non-euro lending being almost completely offset by a similar fall in euro denominated lending.
The amount of money held on deposit increased across all categories. Deposits due to mature within two years showed the biggest increase with customers of financial institutions lodging €700 million in these accounts last month.
Deposits that can be redeemed with notice of up to three months increased by €133 million while the amount of money held in current accounts rose by €72 million.
Money lodged in the Government-backed Special Savings Incentive Accounts (SSIAs) rose by €129.7 million to €2.6 billion.
Throughout August short-term interest rates remained stable just above the European Central Bank's minimum rate of 2 per cent reflecting a view in the market that interest rates will remain unchanged for the time being. The European Central Bank lent €159 billion to credit insitutions last month, some €2 billion more than in July.
Risks in property market continue to mount: page 16
