Mortgage values fall for first time

THE value of mortgages on Irish property have fallen for the first time on a year-on-year basis, figures released by the Central Banks show.

“Residential mortgage lending outstanding (including securitised mortgages) declined by €134 million in November – the eighth consecutive month of decline. The year-on-year change in the level of outstanding mortgages declined for the first time in November 2009, being 0.1% lower than in the same month in 2008,” the Central Bank said in its latest private sector credit bulletin.

And lending by the European Central Bank through the Irish Central Bank to Irish-based financial institutions has fallen from a high of €130.4bn on June 26 to €78.6bn by November 27. However, the bulk of this, €74.32bn, is long-term refinancing.

The stock of private sector credit (PSC) fell by an adjusted 5.2% compared with a 3.7% drop in October, as the writing down of loans and increased provisions for bad debts kept pressure on banks to restrict lending. The annual rate of change in mortgage lending turned negative, at -0.1%, for the first time since the current series began in the early 1990s.

It showed 0.2% growth in October. November was the sixth consecutive month of year-on-year decline in the headline PSC figure. About half of the decline was due to writedowns, increased provisions and the euro’s gain against the dollar, the Central Bank said in the statement.

Non-housing-related household credit continued to decline during the month, and was 21% lower on an annual basis in November. Outstanding indebtedness on personal credit cards decreased marginally on a year-to-year basis, being 0.6% lower in November.

Last week Finance Minister Brian Lenihan said while some new lending was being afforded to small and medium sized enterprises, the Government remained concerned at the proportion refused credit.

The Central Bank’s figures showed the credit decline slowed on a monthly basis. Private sector credit fell by €2.1bn in November following a fall of €2.3bn in October.

Residential mortgage lending, which accounts for about 85% of household lending from resident credit institutions, declined by €134m in November, compared with a drop of €162m in the previous month.

The Government will seek to kick-start the flow of credit by using its “bad bank” to take risky property assets off lenders’ balance sheets from January. Shareholders at Allied Irish Banks last week agreed to join the National Asset Management Agency (NAMA), while Bank of Ireland will hold a vote next month to approve its participation.


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