Mortgage lending accelerated again in September, with total lending in this area now exceeding €50 billion. Cliff Taylor, Economics Editor, reports.

New figures from the Central Bank show that the amount outstanding in mortgage loans was 24.6 per cent up on the same month last year, the highest growth rate since the end of 1990.

Low interest rates and the ready availability of credit are continuing to encourage borrowers, the figures suggest.

Mortgage lending growth has been close to 24 per cent throughout this year, defying predictions that the growth rate would start to ease back.

As well as loans for new homes, the trend by borrowers to consolidate all their debts in mortgage loans may be a factor driving growth.

The Central Bank has repeatedly warned that it is unhappy with this rate of mortgage-lending growth and the associated surge in house prices.

Meanwhile the Irish Financial Services Regulatory Authority (IFSRA), the financial regulator that is attached to the Central Bank, yesterday called on the banks and building societies to tighten up lending criteria in order that customers will be able to repay mortgages in a possible future higher interest rate environment.

The Central Bank figures indicate that the retail clearing banks are taking an increasing share of the mortgage market.

Retail banks' share of the market has increased by two percentage points over the past year to around 37.5 per cent now, with a corresponding decline in the share held by other bank lenders and the building societies.

Reports from Britain suggest that borrowers there may be hit by an increase in UK interest rates, which could be announced at next Thursday's meeting on the Bank of England's Monetary Policy Committee.

UK house prices have accelerated again, however, and the Financial Services Consumer Panel has warned of a "nasty shock" for over-extended borrowers.

Here, however, interest rates are set to remain low with no increase expected from the European Central Bank.

The September figures published yesterday show that overall growth in private sector credit remained steady for the third month in a row, with annual growth of 14.7 per cent just fractionally ahead of 14.6 per cent recorded in August.

Mortgage lending contributed the bulk of the growth with non-mortgage credit slightly stronger, recording a growth rate of 9.8 per cent, compared to 9.6 per cent the previous month.

Total lending by financial institutions to the private sector now stands at €153.6 billion, a monthly increase of 0.7 per cent.

Apart from residential mortgages - where an additional €1.4 billion was extended in September - the other sector recording strong growth was in customer overdrafts, with the amount outstanding rising by €343 million during the month to over €6.25 billion.

Looking at the savings markets, the figures also show a rise in deposits in September in almost all categories.