March 2006 - May 2009 Source: Central Bank and Financial Services Authority of Ireland

The Central Bank of Ireland said today that Irish residential mortgage lending was €18 million lower in May than the prior month - - the second consecutive month of decline. The annual growth rate was down to 2.6 per cent in May, an historic low. Mortgage debt outstanding has remained relatively flat since the beginning of 2009. The Bank said following a fall of over €100 million in April 2009, residential mortgages (including securitised mortgages) declined by €18 million in May. This trend of repayments exceeding new mortgage lending has not been evident at any stage prior to April since the series began in 1990, and reflects the continuing low levels of activity in the housing market. The annual growth rate of Private Sector Credit (PSC) adjusted to account for exchange-rate movements, slowed to 0.8 per cent in May, from a revised 1.6 per cent in April. This compares with an annual growth rate of 15.1 per cent in May 2008.

Mortgage debt outstanding has remained relatively flat since the beginning of 2009, increasing by only €296 million in the year to date by the end of May, compared to €4.6 billion for the same period in 2008. The annual rate of increase in outstanding residential mortgages declined to 2.6 per cent in May, from a revised 3.3 per cent in April.3 This was the lowest annual rate of increase on record. The Bank said the increase in loans to households for house purchase has also been falling in the Eurozone, with the annual growth rate declining to 0.1 per cent in April.

Private-sector credit (PSC) fell again in May, recording the third consecutive month-on-month decline. Credit to households continued to contract during the month, driven, as in recent months, by a fall in consumer credit of approximately €185 million. Credit to non-financial corporates (NFCs) increased by over €225 million in May. However the Central Bank said PSC developments in May were dominated by a fall of €1.2 billion in lending to other financial intermediaries (OFIs), and mainly related to non-euro denominated loans granted to non-bank IFSC companies which have little impact on domestic economic activity. The value of these loans was negatively affected by the weakening of the US dollar in May.

The annual growth rate of PSC, which is adjusted to account for exchange-rate movements, slowed to 0.8 per cent in May, from a revised 1.6 per cent in April. This compares with an annual growth rate of 15.1 per cent in May 2008. The annual increase in non-mortgage credit, which was 6.9 per cent in May 2009, has been boosted by the purchase of residential mortgage-backed securities by credit institutions, issued through special-purpose vehicles (SPVs). The growth rate for the loans component of non-mortgage credit, however, became negative in March, and declined to minus 3.1 per cent in May.

Payments on credit cards exceeded new spending in May and outstanding indebtedness fell by €23 million during the month. The amount of new spending on credit cards is now at 2006 levels in nominal terms. Payments on credit cards has exceeded new spending every month in 2009 to date, and this led to the annual rate of increase in outstanding indebtedness on credit cards to slow to 0.1 per cent in May. This is the lowest annual increase in outstanding credit card indebtedness since the present data series began in 2002.