€40,000 (That’s how much the average consumer owes in personal debts)

THE average consumer has amassed personal debts of around €40,000, new figures from the Central Bank reveal.

That figure includes personal loans and mortgages.

With borrowing for mortgages and personal loans up close to 30% in the last year it is almost certain Ireland will be the most indebted nation in Europe by the end of 2006.

According to the Central Bank, some €5.3 billion in mortgages and other loans was taken out in November, 29% more than in November 2004 and the third-highest monthly increase recorded.

Central Bank chiefs have already warned the country’s love affair with borrowing has reached dangerous levels.

The bank’s governor, John Hurley, last month said the surge in borrowing was the biggest threat to the economy.

The rate of increase in mortgage lending has picked up, with €2.1bn advanced by banks to house buyers in November.

“This (€2.1bn increase) means that the six largest monthly increases in residential mortgages have all occurred in the last six months, with the average monthly rise being €1.95bn,” the Central Bank said yesterday.

The November credit figures also show that:

* Term/revolving loans increased by almost €3.5bn.

* Loans up to one year rose by over €900 million.

* Repurchase agreements increased by €126m.

Non-mortgage credit, which covers personal and term loans, is rising at a faster pace than ever, the bank said.

It also emerged that consumers spent almost €875m on their credit cards in November, compared to €758m in October.

Although €853m was paid back in November, the outstanding debt on credit cards was €2.09bn.

The effect of the recent interest increase on consumers is not clear. The 0.25% rise will add around €25 a month to the average mortgage repayment.

With further hikes expected in 2006, consumer spending may dampen to cope with the extra cost, according to economists.

On a positive note, around €180m was deposited in Special Savings Incentive Accounts (SSIAs) in November, bringing the total saved under the scheme to €6.6bn. With the first SSIAs maturing next April, many will use the cash to pay off debts.