Household lending levels tumble further

Household lending levels deteriorated further in April, with the Central Bank noting a 4% year-on-year fall for the month.

This rate of decline in bank lending was up, marginally, on the previous month which showed a 3.9% annualised fall in lending activity.

While the monthly money and banking statistics from the Central Bank don’t break down exactly how much was lent by the banks; the latest data does show that total loans to households were down by €632m in April, compared with March, when a monthly fall of just €167m, in comparison, was noted.

Mortgage lending fell by 2.5% in April, on an annualised basis, while lending for consumption and other purposes fell by 8.4%, year-on-year.

While still in decline, business lending levels actually improved slightly in April — with the month showing a 1.8% year-on-year decline; following on from an annualised fall of 2.2% in March.

However, when measured on a month-by-month basis, corporate lending was down by €326m in April; compared with a monthly rise of €34m in March.

The latest statistics led the Construction Industry Federation (CIF) to call on the Government to agree a stimulus package with the EU before further economic problems are reached.

Pointing to the continued slowdown in lending and the increase in company insolvency cases, CIF director general Tom Parlon said: “We’ve had two clear indicators that the economy is continuing to suffer.

“The Central Bank has outlined a further fall in lending by Irish banks, which is obviously indicative of a major credit flow problem throughout the economy.

“If the banks are lending less money then there will be less money available to help generate economic growth.”

The EU stimulus package would “increase credit flow throughout the country, and generate thousands of job opportunities,” according to Mr Parlon.

“The Government needs to bring this stimulus package forward as a matter of urgency.

“There have been suggestions they were delaying it until after the EU treaty referendum was complete.

“With voting finishing there is no reason to delay this package any further,” he added.

Meanwhile, industry representative body PIBA (the Professional Insurance Brokers Association) said that the latest lending figures are not surprising, given recent trends.

A spokesperson for the organisation added that a recent survey of its members found that demand for mortgages is continuing to increase, but that lenders are not following through on the supply side.