News Column

Central bank of Ireland-Trends in Personal Credit and Deposits: Q1 2014

June 10, 2014



ENP Newswire - 10 June 2014

Release date- 09062014 - Credit to Irish private households continued to decline in both annual and quarterly terms.

Annual rate of change in personal deposits declined at an accelerating pace.[1]

View release in PDF format with charts and related data tables

Summary:

Total credit to Irish private households outstanding on the balance sheet of resident credit institutions was EUR97.8 billion at end-March 2014, representing a quarterly decline of 1.2 per cent and an annual decline of 3.6 per cent.

The total amount of loans outstanding for house purchase, including loans that have been securitised and continue to be serviced by resident credit institutions, stood at EUR121.9 billion at end-March 2014, down from EUR122.6 billion in Q4 2013.

The total deposits held in resident credit institutions by Irish private households were EUR85.6 billion at end-Q1 2014, representing an annual decrease of 1.5 per cent.

Credit Advanced to Private Households - Loans for House Purchase

The analysis below relates to on-balance sheet lending, unless otherwise indicated.

The annual rate of change in loans for house purchase was minus 3.1 per cent at end-March 2014, following a decline of 3 per cent in Q4 2013. There was a quarterly decline of 0.9 per cent, which represents the seventeenth consecutive quarterly decline. The outstanding amount of on-balance sheet loans for house purchase stood at EUR83.3 billion at end-March. A further EUR38.6 billion of securitised mortgages, which continue to be serviced by resident credit institutions, are also outstanding.

Floating rate mortgages, which include standard variable rate, tracker rate, and mortgages with a fixed rate up to one year[3], accounted for 94 per cent of the outstanding amount of loans for house purchase at end-March 2014 - a decline of EUR478 million over the quarter. Tracker mortgages alone accounted for 49 per cent of outstanding house purchase loans and recorded a EUR1 billion decrease in Q1. Standard variable rate mortgages increased by EUR441 million during Q1, and accounted for 43 per cent of outstanding house purchase loans at end-March.

Fixed rate mortgages accounted for 6 per cent of the outstanding amount of loans for house purchase at end-March 2014, following a net decline of EUR311 million during the quarter. The quarter-on-quarter decline was mainly driven by the over one and up to three year fixed rate category which registered a net decline of EUR199 million.

Loans for principal dwellings, which accounted for 75 per cent of loans for house purchase at end-March, fell by EUR592 million over the quarter. This reflected a fall of EUR293 million in fixed rate mortgages and a fall of EUR298 million in floating rate mortgages. The annual rate of decline in loans for principal dwellings was 2.2 per cent in Q1 2014, which follows a similar decline in Q4 2013.

Standard variable mortgages on principal dwellings and mortgages fixed for up to one year increased by EUR378 million and EUR92 million, respectively during Q1, while tracker mortgages fell by EUR768 million. Floating rate mortgages accounted for 93 per cent of the on-balance sheet outstanding amount of loans for principal dwellings at end-March. Of these floating rate loans, 49 per cent were tracker mortgages, 49 per cent were standard variable and 2 per cent were up to one year fixed. For securitised mortgage pools, the share of floating rate mortgages for principal dwellings was slightly higher at 97 per cent (Chart 3).

The outstanding amount of loans for buy-to-let residential properties (representing 24 per cent of loans for house purchase) fell by EUR178 million to stand at EUR19.9 billion at end-March. This decline reflected a fall of EUR162 million in floating rate mortgages, all of which was seen in the tracker mortgage category. Floating rate mortgages accounted for 97 per cent of the outstanding amount of loans for buy-to-let properties at end-Q1. These floating rate loans were composed of 63 per cent tracker mortgages and 36.5 per cent standard variable mortgages. There was an annual decline of 5.3 per cent in loans for buy-to-let residential properties at end-Q1.

Loans for holiday homes/second homes accounted for 1 per cent of loans for house purchase at end-March 2014. Floating rate mortgages accounted for 95 per cent of the outstanding amount of loans for holiday homes/second homes at end-March. Of these floating rate loans 57 per cent were tracker mortgages and 43 per cent were standard variable mortgages. The annual decline in loans for holiday homes/second homes was 12.9 per cent at end-Q1.

Credit Advanced to Private Households - Other lending

Non-housing related lending, or 'other personal' lending, accounted for 15 per cent (EUR14.5 billion) of total on-balance sheet credit advanced to Irish private households by resident credit institutions at end-March 2014.

Lending in this category fell by 6.5 per cent in the year to end-March. This followed an annual decrease of 8.8 per cent at end-December 2013.

Non-housing related lending to private households peaked in Q1 2009 at EUR28.9 billion. By end-March 2014 it had declined by 33.2 per cent from that peak to EUR14.5 billion.

Non-housing related lending to private households declined by EUR370 million during Q1 2014 (2.4 per cent). This reflected a decline in both finance for investment purposes, and finance for other non-housing related purposes of EUR61 million and EUR309 million, respectively.

Deposits from Private Households

The deposits held in resident credit institutions by Irish private households stood at EUR85.6 billion at end-March 2014. This represents a decrease of EUR72 million (0.1 per cent) during the quarter.

The outstanding amount of personal deposits was 1.5 per cent lower on an annual basis at end-March 2014; the year-on-year decline at end-December 2013 was 1.1 per cent.

The net flow of personal deposits in the year ending March 2014 was minus EUR72 million.

[1] The extensive set of Personal Credit and Deposits Statistics tables, along with a detailed set of explanatory notes are available here. Recent data are often provisional and may be subject to revision. A list of credit institutions resident in the Republic of Ireland (i.e. the population covered by these statistics) is available here.

[2] Chart relates to on-balance sheet lending.

[3] Loans with interest rates fixed for a period up to one year are included with floating rate loans in line with international practice.


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Source: ENP Newswire


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