Number of deposits held by households rise

The total level of personal loans and mortgages held by Irish people has shrunk every month for the last 39 months, while savings have been on the increase over the same period, according to figures released by the Central Bank.

The amount of credit extended to Irish households at the end of March and sitting on the balance sheets of the banks was €100.4bn, which is 1.5% lower than the three months to the end of December and 3.5% lower than year ago levels.

There was a further €41.4bn in securitised loans being serviced by Irish banks at the end of the first quarter.

The total amount of deposits held by households at the end of March was €87.2bn, which was a 0.2% increase over the previous three months and a 0.3% over the year.

Total mortgage lending was down 1.9% for the year with the stock of outstanding mortgages at the end of March falling to €84.3bn.

The chief operations officer of the Professional Insurance Brokers’ Association, Rachel Doyle, said that demand for mortgages is increasing.

“At the same time bank lending is going in the opposite direction. We have known for some time that bank lending was in crisis territory.

“However, one would have expected to see an easing of the situation at this stage, not a deepening. This is a disastrous situation,” Ms Doyle said.

Tracker mortgages, which are mostly loss making, make up about 50% of the outstanding mortgages.

Separately, the Central Bank’s new registrar of Credit Unions, Sharon Donnery, yesterday addressed a Credit Union Managers’ Association seminar.

She noted that the sector faces many challenges. Gross loans now make up roughly one-third of all assets and one-fifth of all loans are in arrears by over 90 days.

In her address, Ms Donnery said she was disappointed that the Irish League of Credit Unions had rejected the Central Bank’s framework for multi-debt borrowers.

“I have heard many different views about it in the last few weeks and I ask you to consider how your members can solve their indebtedness problems without some form of co-ordination among their creditors, essentially, what is the alternative?

“And for the wider credit union sector, what is best way to ensure that you can influence the outcomes?”

And because of the lack of credit provided, credit unions will have to rely more on their investment portfolios to generate returns.

But the investment environment has deteriorated, which means that lower returns will be much more common in the future.

Consequently, it is important that the management of credit unions understand the costs, risks, and benefits of every investment, she said.