Business

Number of ‘green’ personal loans jumped over 90%, say banks

Average green loan had value of more than €21,600 in the fourth quarter of 2023

Solar panels on the roof of a house: over the past two years almost 6,500 green personal loans valued at €139m have been drawn down. Photograph: iStock

Laura Slattery
Fri May 10 2024 - 06:00

The number of “green” personal loans issued by banks in the Irish market jumped by 92 per cent last year, with customers drawing down almost 4,300 such loans worth €95 million, according to Banking & Payments Federation Ireland (BPFI).

The value of green loans last year was more than double that seen in 2022, the BPFI’s latest personal loans report indicates. Over the past two years almost 6,500 green personal loans valued at €139 million have been drawn down.

Green lending includes loans advanced to finance home improvements that enhance energy efficiency as well as loans used to finance the purchase of electric or plug-in hybrid cars.

The industry body said this “key “segment of the loans market was poised for further growth with the introduction of the home energy upgrade loan scheme launched by Government last month, which will offer homeowners low-cost loans to help make their property warmer and cheaper to run.

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In the fourth quarter of 2023 the value of green personal loans increased by 56.3 per cent year-on-year to €19 million, with these loans rising by 39.2 per cent in volume to 892. The average green loan in the final quarter was €21,608, which is significantly higher than the average for all loans, which stood at €10,071.

“While growth was seen across all categories it is encouraging to see that strong growth in green personal loans continued into the fourth quarter of 2023,” said BPFI chief executive Brian Hayes.

The total number of personal loan drawdowns rose by 17.9 per cent in 2023 to almost 203,000, with loan values up by 23.3 per cent to more than €2 billion, the BPFI said.

In the fourth quarter alone there were 43,954 personal loan drawdowns, which were valued at €443 million. While the fourth quarter has traditionally been the weakest in recent years, personal loan drawdown activity rose in volume terms by 4.2 per cent year-on-year and by 12.3 per cent in value terms over the same period.

The number of car or auto finance loans rose by 7.2 per cent year-on-year to 11,800 in the fourth quarter, while the value of loans increased by 16.4 per cent to €147 million.

There were 12,283 home improvement loans in the fourth quarter, virtually unchanged on the same period in 2022. These were valued at €139 million, 9.4 per cent higher than a year earlier.

Over 2023 as a whole car or auto finance loan volume grew by 24.3 per cent to 57,789, while home improvement loan volumes increased by 16.8 per cent to 56,463.

The value of loans for other purposes, including education, holidays and special occasions such as weddings, rose by 11.3 per cent year-on-year to €157 million. Other loans volumes rose by 5.3 per cent year-on-year to 19,871.

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics

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