Mortgage lending raced ahead again in September, with borrowing approaching the all-time record reached in July, writes Una McCaffrey
The Central Bank said yesterday that lenders had advanced €1.6 billion in new mortgages in September. The only recently-recorded instance of a higher monthly figure came in July this year, when €1.7 billion was advanced.
The latest jump provides hard evidence to back anecdotal reports of buoyant activity in the property market. House-buying traditionally takes off for a concentrated period each autumn, with mortgage lending figures for the months ahead likely to reflect this further.
Mortgage lending has shown no signs of easing this year, in spite of repeated surveys from Permanent TSB and the ESRI that pointed to slower growth in house prices.
The amount loaned in September is the second-highest monthly total recorded by the bank since it began building the current data series in 1996.
The data will bring no comfort to the Central Bank, which has long been voicing concerns about the pace and volume of credit growth in the Republic.
In September, the bank said it was worried that consumers were not taking the possibility of future interest rate increases into account when taking out a loan.
The pace of underlying annual growth in mortgage lending was also strong in September, although it eased slightly from 27.6 per cent in August to 27.4 per cent last month.
The bank said the fall in annual growth was due to particularly strong mortgage growth in September 2003.
Economists are expecting mortgage lending to continue expanding solidly in the months ahead, even though Central Bank figures for the first half of the year have pointed to a slowdown in investor activity.
Mr Rossa White, economist with Davy, said that while he continued to be surprised by the extent of mortgage lending growth, it was unlikely to ease as long as interest rates remained at historically-low levels.
Commentators now believe that the European Central Bank will introduce only modest interest rate hikes next year, with previous expectations of a one per cent increase to 3 per cent over the year diminishing.
"You really need a full point to cool it," said Mr White.
Lending in areas outside the mortgage market also posted solid growth in September, the latest figures show.
Annual growth in non-mortgage credit - which includes personal loans and overdrafts - rose from 20.4 per cent in August to 21.1 per cent in September.
This marked what the Bank described as "rebound" on a slight slowing in non-mortgage credit growth in August.
A breakdown of the figures shows that the value of term loans rose by close to €1 billion over the month, while shorter-term loans expanded by €182 million. Overdrafts grew by €83 million. The bank said total private-sector lending had climbed by more than €2.8 billion to €188 billion in September.
