Mortgage lending stays on a high
Mortgage lending rose by €2.1bn in March, the second highest increase on record, it was revealed today.
The Central Bank’s monthly statistics showed home-buyers were continuing to borrow huge sums at some of the highest-ever levels.
The near-record figures come as house prices rose at the fastest rate since 2000. In the 12 months to the end of March, Permanent TSB/ESRI found a 12.1% rise in the market. Average prices now stand at €267,664.
Housing Minister Noel Ahern hit out at the lending policies of the country’s largest banks, insisting that 100% mortgages were driving up house prices. He said there is too much credit in circulation, and by definition credit is inflationary.
In its latest bulletin on borrowing and savings, the Central Bank revealed private-sector credit growth eased back from the record levels of recent months, but still remained extremely strong. It dropped only 0.4% from February to March.
Total lending by credit institutions in Ireland to non-Government Irish residents increased by €3.5bn, or 1.3%, to €271.4bn in March.
The monthly report stated: “This strong demand for residential mortgages has taken place against a background of a rapid increase in new-house building.
“Figures released by the Department of Environment, Heritage and Local Government show that nearly 22,000 houses were completed in the first quarter of 2006.”
The Central Bank also revealed overdrafts declined by €94m while the Special Savings Incentive Accounts (SSIA) rose by €211m to €7.4bn in March.
