Central Bank and Financial Services Authority of Ireland

The Central Bank says today that the net increase in Irish residential mortgage credit during the first three months of 2009 was €428 million. The comparable figure for the first three months of 2008 was €2.6 billion. The net monthly increase of €20 million in March is historically low, and contributed to the decline in the annual rate of increase in residential mortgages (inclusive of securitised mortgages) to 4.2 per cent in March, from 4.9 per cent in February.

The Bank said mortgage demand is likely to have been dampened by general economic conditions, uncertainty with regard to future income and the expectation of further declines in house prices. On the supply side, recent Irish results from the Eurozone Bank Lending Survey suggest banks are tightening their lending criteria, and reductions in official ECB interest rates are not being passed on in full by all mortgage providers.

The Central Bank said Irish private-sector credit (PSC) declined by €3.9 billion in March, more than offsetting the increases that had been recorded for the first two months of 2009. A reduction of €1.4 billion in lending to non-bank IFSC companies, which have limited connections with domestic economic activity, is reflected in this overall decline in PSC. The remaining reduction in PSC is mostly attributable to a fall in credit to non-financial corporates (NFCs) of €1.3 billion.

The annual rate of growth in PSC continued to decrease in March, falling to 2.3 per cent, and compares with an annual PSC growth rate of 17.1 per cent in March 2008. This downward trend has been evident since mid-2006. The annual rate of increase in outstanding non-mortgage credit slowed to 8.3 per cent in March, compared with 12.2 per cent in February, reflecting the fall in credit to NFCs as well as a small reduction of €254 million in non-housing related household credit.

Central Bank and Financial Services Authority of Ireland

The annual rate of increase in credit card debt fell to 1.1 per cent in March, compared with 8.6 per cent twelve months earlier. New spending increased by €120 million over the month, while payments received were €123 million higher than February. However, consumers spent 16 per cent less using credit cards during the first three months of 2009 compared to the same period in 2008.