Signs of easing in Irish mortgage demand

Irish private-sector credit growth remained strong in January, but demand for mortgages is slowing, according to the latest credit…

Irish private-sector credit growth remained strong in January, but demand for mortgages is slowing, according to the latest credit statistics from the Central Bank.

Growth in lending to the private sector remained unchanged at 26.6 per cent in January. Non-mortgage credit once again accounted for most of the €3.3 billion increase in credit during the month, while there are signs that growth in residential mortgage lending may have peaked.

The traditional January effect was evident in mortgage lending, with residential mortgages increasing by about €1 billion or just over half of the €1.9 billion rise in December.

Annual growth in residential mortgage lending has declined consistently since July 2004. This trend continued in January, when the underlying growth rate fell to 26 per cent from 26.5 per cent in December.

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Year-on-year growth in non-mortgage credit rose to 24.8 per cent in January from a revised 24.4 per cent in December.

This was the fifth successive monthly rise in its annual growth rate, which is now over 10 percentage points higher than it was a year ago.

The rise in non-mortgage credit has been driven by term/revolving loans, which accounted for over 70 per cent of the increase during the past five months.

Total lending by credit institutions in Ireland to the private sector increased by €3.3 billion or 1.7 per cent to €202.9 billion in January.

Having risen by almost €100 million in December, outstanding indebtedness on credit cards was nearly unchanged in January at €780 million. The total was boosted, however, by the inclusion of data from an additional card provider.