Elevated household debt ‘not out of line’
Household debt remains at elevated levels but may be partly due to a growing population and an expanding economy, Department of Finance research suggests.
In its Analysis of Private Sector Debt in Ireland, researchers weigh the best methods to measure both Irish household and corporate debt —which remain among the highest in the EU over a decade after the property and banking crash.
The paper estimates benchmarks against which to compare Ireland’s underlying or core private debt based on fundamental economic factors.
It finds overall private debt as a share of the recently developed Irish economic measure, the so-called Gross National Income (GNI), to be at 172%. That comprises household debt at 77% and underlying corporate debt of 95%.
Household debt, which is largely made up of mortgage debt rather than non-secured personal borrowings, is found to have fallen to pre-crisis levels when measured by GDP, and remains “relatively high”, at 77% even when measured by GNI. “Household debt is found to be below the benchmark, although Ireland’s households remain among the most indebted in the EU, with pockets of high debt still existing,” according to the research.
Finance Minister Paschal Donohoe said: “While the paper finds that household debt levels are not out of line with fundamental economic drivers, the fact that Ireland’s households remain among the most indebted in the EU highlights the continued need for the Government to closely monitor trends in household debt, including regarding mortgage arrears.”
