The demand for mortgages remained strong in April although new figures show that the number of overdrafts advanced by financial institutions fell.Credit growth figures compiled by the Central Bank of Ireland record that demand for credit in the Irish economy has held steady at close to 16 per cent since the beginning of the year. Siobhán Creaton, Finance Correspondent reports.
In April, the demand for credit rose by 15.8 per cent, just marginally below the 16 per cent rise in March. New mortgages rose by 23.6 per cent in April, unchanged on the previous month.
The outstanding level of residential mortgages increased by €100 million in April, but when adjusted for the securitisation of loans by one mortgage lender during the month, the figure rises to €850 million.
Other loans and credit facilities advanced during the month grew at a rate of 10.9 per cent, slightly ahead of 10.2 per cent in March.
The Central Bank reports overdrafts were the only sector where demand reduced. In April the amount of overdrafts advanced fell by €467 million.
Loans up to and including one year rose by €716 million and term loans were €304 million higher.
Total lending by credit institutions to non-Government Irish residents rose by €1.4 billion to €146.7 billion in April. For the second month in succession, the largest contribution came from loans up to and including one year.
Most of the increase in credit was from domestic borrowers while lending to IFSC companies increased by €270 million.
During April there was a very modest change in the amount of money held on deposit with Irish-based financial institutions.
Overnight deposits, including current accounts, increased by €151 million and deposits redeemable at notice of up to three months expanded by €189 million.
Deposits with an agreed maturity of up to two years contracted by €56 million, while repurchase agreements also fell by €74 million.
The amount of money held in the Government-backed Special Savings Incentive Account scheme rose by €143 million to €1.2 billion, according to the Central Bank.
There was an increase of €1.5 billion in funds provided by the Bank to credit institutions as part of the European Central Bank monetary policy operations. All of this increase was accounted for by main refinancing operations.
Interest rates remained unchanged in April with analysts optimistic that the ECB may opt to cut its key interest rates next month.
A further cut in interest rates is expected to continue to underpin strong demand for residential mortgages in the coming months.
Some commentators are warning about a possible softening in house prices this year. Yesterday Davy Stockbrokers suggested that property prices would have to fall in the short-term, noting that property has significantly outperformed equities in terms of overall financial returns.
