Cost of living - Mortgage rates remain exorbitant

EVEN though the latest figures published from the Central Bank yesterday showed somewhat of a slow-down, they hardly indicate that the brakes were overly applied.

The private sector owes €302.7 billion, and our rate of our credit growth is three times that of the European average.

Although the bank said the adjusted annual growth rate was 28.1% in September, the month it reported on, private sector credit logged the second-largest monthly increase of the year at €5.8 billion.

The sector’s growth rate may have eased for the third month in a row, as the bank points out, but it still does not belie the fact that non-mortgage credit growth rose in that month and outpaced private-sector credit and residential mortgages.

The adjusted annual growth rate of non-mortgage credit in the month under review was 32%, up from 31.7% in August.

Borrowing for mortgages at €117.1 billion, while representing considerably less than half our credit bill, is still a doubling over three years of residential mortgage borrowings. For the month of September, it increased by €1.9 billion, to bring it to its present cumulative level.

Earlier this month the Central Bank expressed its concern that the present high level of activity in the housing market made it exposed to a shock in the economy, proffering an unexpected decrease in competitiveness as a possible factor.

Its fourth quarterly bulletin this year was optimistic in regard to the economy, but it did point to risks because of the pattern of growth the country had seen.

The caution it expressed in relation to house prices, despite its broadly good economic outlook, surrounded the issues of affordability.

While it is unlikely that the housing market will be severely corrected, such as a hard or difficult landing, mortgages are becoming more difficult to afford.

At the moment the rate of inflation is 4%, in comparison to the average rate of 2.5% across Europe, which means that the cost of living in Ireland is considerably higher.

The cost of living impacts on everybody’s lifestyle on a daily basis, and there is little, if anything, anybody can do about it.

Apart from the burden of a mortgage, there is the not inconsequential matters such as the cost of health, clothes, food and education, as well as the price of home heating, petrol or public transport. The cost of living remains exorbitantly high.