MORTGAGE LENDING grew at its slowest annual rate in 16 years in April, and growth in overall lending to the private sector declined, according to new figures from the Central Bank.
After an upturn in March, the annual rate of increase in private-sector credit reverted to trend last month, declining to 15.9 per cent from an annual rate of 20.8 per cent in March.
At 11.4 per cent, the rate of increase in residential mortgage lending is now at its lowest annual rate since May 1992.
Although the increase in residential mortgages in the month of April is usually below the yearly average due to Easter, the Central Bank noted that this reason may not apply in 2008 as Easter fell in March.
The net monthly change in residential mortgages remained above €1 billion for the second consecutive month, bringing total outstanding residential mortgages to €143.4 billion.
In what may be a sign that consumers are beginning to struggle with higher food and fuel bills, the monthly increase in outstanding indebtedness on credit cards rose by 2.1 per cent – the second highest monthly increase in 12 months after December, which traditionally records the highest month-on-month increase.
But on an annual basis, outstanding indebtedness on credit cards increased year-on-year by 7.2 per cent in April, down from 8.6 per cent in March, the figures showed.
Alan McQuaid, economist at stockbroking firm Bloxham, said the latest banking figures were further evidence of a slowing Irish economy.
“Both overall private-sector credit growth and residential mortgage lending growth are likely to slow further in the coming months as the economy continues to weaken and no relief is forthcoming from the European Central Bank,” he said.
“There is little chance of the European Central Bank cutting official interest rates any time soon, and even if it were to move in the short term, there is no guarantee that any easing in rates would be passed on by the retail banks to customers,” Mr McQuaid said.
Growth in residential mortgage lending will fall back to decline to single-digit annual rates of increase by the end of the year, Mr McQuaid added.
