Volume and value of personal loan drawdowns hit record highs

The Banking and Payments Federation Ireland also said the number of green loans issued increased by 5.1% to 1,314 compared to last year

Between April and June, there were 60,674 personal loans drawn down worth a combined €641m. 

The number of personal loans drawn down hit their highest levels on record between April and June with a significant increase in those seeking financing to buy a car, new data from the Banking and Payments Federation, Ireland (BPFI) shows.

According to the data, 60,674 personal loans were drawn down during the second quarter of this year — an increase of 7.6% compared to the same period last year. The total value of all these loans stood at €641m, an 18.8% increase. 

Chief executive of the BPFI Brian Hayes said these are the highest levels — in both volume and value —since they started keeping track at the start of 2020. During the first three months of the year, just under 50,000 personal loans were drawn down worth a combined €551m.

There was a 12.4% increase in the number of personal loans drawn down for car or auto purchases rising to 17,794. The total value of all these loans combined reached €224m, which is an increase of 18.9%, making the size of the average car loan €12,605.

There were just over 16,000 home improvement loans drawn down — a 1.7% increase — valued at €202m.

The largest category was just “other” which contained 26,794 loans — up 8.3% — valued at €214m. This category contains loans for things such as education, holidays or other special occasions like weddings.

Mr Hayes said these figures came as the Central Bank of Ireland reported that there was almost €17.9 billion in outstanding consumer loans.

“Within that, loans with terms of over one and up to five years increased to more than €10.9 billion, the highest value since July 2012,” he said.

These personal loan drawdowns came just as the European Central Bank (ECB) began lowering interest rates in June. There have been two additional rate cuts since then with another rate cut potentially coming next month.

Green loans

The BPFI also said the number of green loans issued increased by 5.1% to 1,314 compared to last year with an average value of €22,933. The average green loan was more than twice the value of an average personal loan of the average for all loans at €10,560.

The total value of these green loans rose to €30.1 million during the quarter, a 2.9% increase. A green loan is designated by the lender and can be used to finance retrofitting upgrades for a home or an electric car.

Mr Hayes said the BPFI expects there to be continued growth in the area of green loans in the months ahead supported by the introduction in April of the Government’s Home Energy Upgrade Loan Scheme which will “help make home energy upgrades more accessible and affordable”. 

The loan scheme will allow homeowners to borrow between €5,000 and €75,000 — in a term of up to 10 years with significantly lower interest rates — to carry out home energy upgrade works.

The scheme is being managed by the Sustainable Energy Authority of Ireland but the loans are provided through participating finance providers, including banks and some credit unions.