Business demand for term loans and other credit drove private sector borrowing growth during November, the latest figures from the Central Bank show.

The bank said in a report published at the weekend that total lending by credit institutions in the Republic to non-government Irish residents grew by €3.8 billion in November to €194.5 billion.

The main elements of the €3.8 billion extra loaned to consumers and businesses during the month were residential mortgages, which accounted for €1.5 billion of the increase, and term loans, which added €1.4 billion.

Overdrafts grew by €418 million and other mortgages were €272 million higher at the end of November.

In a statement commenting on the figures, the Central Bank said that private sector demand for credit had strengthened steadily throughout 2004.

Underlying year-on-year growth hit 25.8 per cent in November, compared with 25.2 per cent in October and 17.9 per cent in December 2003.

"While demand for residential mortgages remained strong, with a net increase of €1.5 billion over the month, the main driver of private sector credit (PSC) growth in November was non-mortgage credit," the bank said.

"This was reflected in a sharp jump in the year-on-year growth rate for non-mortgage credit, which increased to 22.6 per cent in November, from 21.5 per cent in October."

The bank said that credit demand from businesses outside financial services provided the main impetus for this growth, increasing their borrowings by almost €2.5 billion in November.Households increased their non-mortgage debts by €450 million.

At the same time, the rate of growth in home loans fell slightly to 27.1 per cent in November from 27.3 per cent in October.