Consumer debt equals €33,733 for every person
Figures released yesterday by the Central Bank show homeowners owed a record €139.8bn on mortgages at the end of last year, equal to €235,550 for each of the country’s 593,500 mortgage borrowers.
Central Bank figures also revealed e2.85bn was owed on the nation’s 2.2 million credit cards at the end of December, equal to €1,320 per card.
In 2003 the outstanding debt on mortgages was e59.24bn — about €99,820 per home borrower — while the amount owed on the nation’s 1.8m credit cards then was €1.63bn or €900 per card.
Yesterday, economists said consumers were feeling the pinch as interest rates started to bite and made borrowing more expensive while the rising cost of oil and food was also hurting.
“There are probably individual consumers who are too exposed (have too much debt) and they have undergone a painful adjustment over the last 12 months,” said IIB Bank chief economist Austin Hughes.
“There are about 40,000 to 50,000 people who have felt significant strain over the last year and this is the group who would be feeling more pain,” he said.
Central Bank figures show mortgage borrowing is at an all-time high but last year the amount loaned by banks grew at its slowest rate for 12 years as higher interest rates hit house sales.
Last year, the total amount of mortgage borrowings rose 13.4% compared with rates of 24.2% in 2006, 27.1% in 2005, 26.5% in 2004, and 25.5% in 2003 as the property market boomed.
Concerns over inflation have caused the European Central Bank to increase interest rates, making borrowing costlier so people have less money for general purchases which in turn brings about price rises.
Bloxhams Stockbrokers economist Alan McQuaid predicted consumers would not see interest rates lowered for months.
“It is hard to see any [cut] in the first half of 2008 especially after [European] inflation hit a record high of 3.2% in January,” he said.
The Central Bank also said the last of the SSIA savings account bonuses, which were paid in April, also had an effect on credit card payments.
Consumers paid off “an unusually large sum” of €217m in May alone on the nation’s credit card bills and during 2007 paid €1.2bn in all off their balances.
