Mortgage borrowing at fastest rate in 20 years

Mortgage borrowing surged 26.9 per cent in the year to March to reach the fastest growth rate in over 20 years.

Monthly data from the Central Bank shows that €1.3 billion was advanced to property buyers in March as a strong housing market continue to push mortgage lending higher.

March also saw record growth in private-sector credit -  which recorded its largest-ever monthly increase of almost €6 billion.

Low interest rates are encouraging borrowing for mortgages and other uses and the rate of borrowing in March was up from 19.3 per cent to 21.8 per cent.

The Central Bank notes that although demand for mortgages remained strong, almost 80 per cent of the credit advanced went to other sectors of the economy.

One third of the March credit went on repurchase agreements, which saw a rise of €1.9 billion in March. Loans of up to one year showed an increase of €1.7 billion, while term and revolving loans grew by €1.8 billion.

Total private sector credit stands at €170.6 billion, €27 billion up on the same month in 2003. Overall mortgage lending stands at €57.7 billion, €13.3 billion higher than February last year.

The Central Bank noted that three-month and 12-month market interest rates eased by 9 to 11 basis points.

Today's data on record private sector credit growth comes less than a week after the Central Bank and the Financial Services Authority warned that debt levels in the Republic are growing at an "unsustainable" rate.

They said that unless borrowing slows quickly the financial stability of the economy could be threatened.

New data reveals that the ratio of personal credit to disposable income is now 95 per cent, almost twice the 43 per cent of the past decade.