Loan repayments top bank lending

Irish households last month funnelled over €500m more back into the banks than lending institutions gave to stimulate economic activity, according to the Central Bank.

Its monthly money and banking statistics reported a decline in lending on the banks’ balance sheets in July, driven by a fall in home lending on banks’ books in July.

“Households’ repayments of loans from credit institutions exceeded drawdowns by €513m during the month of July; this development was mainly driven by a decrease of €231m in loans for house purchase,” the report states .

These are balance sheet figures that include all renegotiations of outstanding loans as well as new lending.

Figures published by the Irish Bankers Federation (IBF) yesterday reported that there had been an increase in both the number and value of mortgages granted in July.

The value of mortgage approvals grew by 9.3% on an annual basis and by 16.3% on a monthly basis, with €325m loaned for mortgages in July.

However, not everybody was pleased with the figures reported by the IBF. Karl Deeter of Irish Mortgage Brokers pointed out that the market here remains extremely dysfunctional.

“The fact that the IBF can change the message nationally in spite of the facts is quite impressive,” he said.

The IBF is glamorising one set of figures to the detriment of the true state of the mortgage market, Mr Deeter said.

He added that there has been a contraction of around €6bn in the amount of money available for house purchases in Ireland, which has fuelled the cash market. “There have been 13,000 transactions in the property market but only 5,927 mortgages. 60% of transactions are cash.”

Mr Deeter said the only thing pushing up house prices in Ireland was the banks’ inaction. He claimed that someone has to die for a house to come on the market in Ireland at the moment.

“The recovery has nothing to do with the banks. It is down to two things, a failure to lend and no properties on the market, which has led to a false dawn in property prices,” he said.

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