July 2006 - August 2009 Source: Irish Central Bank

Irish residential mortgage lending outstanding fell by €84 million in August -- the fifth straight decline. The increase from a year earlier was down to 0.8 per cent in August, from 1.2 per cent in July. Irish private sector credit (PSC) fell 3 per cent in the year to end-August 2009, mainly explained by valuation effects - -  writedowns and increased provisions against bad and doubtful debts. Mortgage debt outstanding has fallen by €132 million so far in 2009, compared with a €7 billion increase for the same period in 2008.

The Central Bank said today that adjusting for write-downs and provisions, the data indicate that the underlying stock of credit to the private sector was relatively unchanged over the year. Non-mortgage credit was 0.6 per cent higher at the end of August 2009 compared with August 2008. The underlying data show a compositional change, in that a 10 per cent reduction in the outstanding amount of non-mortgage loans was offset by increased holdings of securities. The increase in holdings of securities largely arises from internal securitisations by credit institutions, where credit institutions purchase the asset-backed securities issued through special purpose vehicles (SPVs) they establish for use as collateral in ECB refinancing operations.

The €1.5 billion decline in PSC outstanding during the month of August compares with monthly falls of €1.5 billion and €3.4 billion in June and July respectively and is the sixth consecutive monthly decline. Approximately 60 per cent of the cumulative €6.4 billion decline in PSC over the three months ending August 2009 is due to valuation effects, with the remainder due to a reduction in the underlying stock of credit.

The Bank said, in contrast to earlier months, where increased provisions and write-downs were the major components of the decline in PSC, exchange rate movements were particularly relevant in August, as the euro strengthened against the US dollar and sterling.

The amount of household credit outstanding decreased during the month by €469 million, as a fall in consumer credit accompanied another monthly decline in mortgage lending. Residential mortgages (including securitised mortgages) fell by €84 million in August, the fifth consecutive monthly decline. Mortgage debt outstanding has fallen by €132 million so far in 2009, compared with a €7 billion increase for the same period in 2008. The annual rate of increase in outstanding residential mortgages declined to 0.8 per cent in August, from 1.2 per cent in July.

July 2006 - August 2009 Source: Irish Central Bank