Mortgage lending hits lowest level in 18 months

THE combined value of residential mortgage lending fell by €71 million in July, the fourth consecutive month of decline, according to latest monthly credit statistics from the Central Bank.

That fall-off resulted in the growth in overall mortgage lending slowing to 1.2%, on a year-on-year basis, in July. In June, the annualised growth in lending to house buyers was measured at 1.9%.

The latest Central Bank figures also showed that total lending in the Irish economy fell by €3.7bn in July, on a rolling month-by-month basis to €383.9bn, which was the fifth month in a row where an overall decline was evident. That drop in lending, down by 2.2% for the month on a year-on-year basis, was attributed to a number of issues, including the write-down of loans and an increase in national bad debt provisions.

Due to a continuation of the lowering of consumer spending levels, more money was spent on paying off credit card bills than on new spending. The latest figures show that the amount owed by households fell by €404m in July.

The Central Bank’s July statement said: “The €3.7bn decline in private sector credit (PSC) during the month of July compares with monthly falls of €1.6bn and €1.4bn in May and June, respectively. This is the fifth consecutive monthly decline in PSC. A reduction of €2.1bn in credit outstanding to non-financial corporates was the main component underlying the fall in July.”

Valuation effects accounted for approximately 80% of the headline lending decline during the month.

“The effect of increased write-downs and provisions against bad and doubtful debts, reflecting weaknesses in the broader economy, have led to the headline stock of PSC on credit institutions’ balance sheets to contract by 2.2% over the year to the end of July,” the’s update added.

July’s monthly overall lending level of €383.9bn was the lowest monthly figure this year and the lowest level recorded since February of 2008, 18 months ago.


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