Net household borrowing has increased at its highest rate for seven years, according to new figures from the Central Bank.

Irish households’ drew-down €240 million more in new loans for consumer purposes than was repaid in the three-months to end-May 2016.

This resulted in positive annual growth in May, the largest increase since February 2009.

Net new lending was only observed for medium-term loans, with short and long-term borrowers continuing to make net repayments on outstanding debt.

These types of loans typically include car loans, furniture, domestic appliance and holiday loans; with overdrafts and credit cards also included.

Loans to households adjusted for loans sales and securitisations, declined by 3.4 per cent compared with the same period in 2015.

Mortgage loans, which account for 83 per cent of on-balance sheet household loans, declined by €123 million.

In year-on-year terms, mortgage loans declined at a rate of 2.2 per cent, with households repaying €1.7 billion more than was advanced in new loans.

New loans for fixed rate principal dwelling (PDH) mortgages exceeded repayments by €1.8 billion over the twelve months to end-Q1, but were offset by net repayments in floating rate mortgages of €2.1 billion.

Following two consecutive months of new non-housing lending exceeding repayments, a partial reversal occurred in May. In annual terms, non-housing loans for consumer purposes increased by 0.5 per cent, the largest increase since early-2009.

Deposit flows from households decreased by €249 million. The Central Bank noted that this “perhaps in part reflected seasonal factors”. In annual terms, an increase of 2.3 per cent was recorded.

Irish households were net funders of the Irish banking system for the eleventh consecutive month. Banks now hold €6.4 billion more household deposits than loans. By contrast, in early-2009, household loans exceeded deposits by €53.5 billion.

By contrast to the household sector, banks held marginally more NFC loans than NFC deposits.

Lending to NFCs declined by 6.3 per cent in annual terms. However, this decline masks divergent trends between short and medium term maturities.

Medium term net lending to NFCs grew by 15.8 per cent year-on-year, with draw-downs exceeding new lending by €1.9 billion.

NFC deposits increased by €1.8 billion (4.1 per cent). The monthly increase was mainly due to NFCs deposits in overnight accounts, largely with branches of foreign-owned banks’.

In the twelve months to May, NFC deposit flows increased by 10 per cent reflecting strong corporate inflows into the Irish banking system.

Developments in other counterparty sectors

Lending to the Irish private sector has been the main driver of net lending to Irish residents since early 2014 and accounted for 75 per cent of banks’ loan books. In annual terms, loans to the Irish private sector declined by 5 per cent.

Credit institutions’ holdings of Irish issued debt and equity securities declined by €535 million in May, with financial vehicle corporations (FVCs) accounting for most of this decline.

Irish banks’ borrowings from the Central Bank as part of Eurosystem monetary policy operations decreased in May by €519 million.

The outstanding stock of Central Bank borrowings was €8.3 billion, with the domestic market banks accounting for 97 per cent.