Growth in lending to Ireland's private sector was the weakest in over four years in January, it was revealed today.
Overall private sector credit growth slowed to an annual rate of 16.8 per cent last month from 17 per cent in December and was the weakest rate of expansion since September 2003, data from the Central Bank of Ireland showed this morning.
That was well below a peak of 30.3 per cent hit in June 2006 when the central bank warned Ireland's then booming property market was fuelling unsustainably high rates of lending growth.
Loans to homebuyers fell to it lowest annual level in almost 14 years.
Private sector credit rose €2.2 billion or 0.6 per cent in the month, bringing the outstanding level to €379 billion. The central bank said tighter credit standards on business loans appeared to account for the tiny increase.
Central Bank in its monthly statistics report
A recent trend of large increases in lending to non-bank companies based in Ireland's International Financial Services Centre had also not been repeated in January, with a decline in such lending of over €500 million, the bank said.
"Irish credit institutions participating in the Euro Area Bank Lending Survey reported increased tightening of credit standards for loans to enterprises, especially during the final quarter of 2007," the bank said in a statement.
"This is now becoming evident in the data."
Growth in residential mortgage lending slowed to an annual rate of 12.9 per cent from 13.4 per cent in December and was the weakest since March 1994 after last year's end to Ireland's decade-long property boom when house prices quadrupled.
"While the net increase in adjusted residential mortgage lending is usually weak in January, the seasonal effect was very marked at the start of 2008," the bank said.
"With a monthly increase of just €824 million, this was the most subdued start to the year since 2003. The monthly increase in outstanding residential mortgages has not been below €1 billion since January 2005."
The month-on-month rise brought outstanding residential mortgage lending in Ireland to €140.7 billion.
The annual growth rate of non-mortgage credit was unchanged from December's 20.6 per cent, however.
The central bank said there was a continued decline in the rate of increase in lending to Ireland's real estate and construction sectors. "This is reflected in a small monthly increase in lending to non-financial corporates in January," the bank said.
The annual increase in outstanding indebtedness on credit cards slowed to 8.9 per cent from 9.3 per cent in December and was less than half the rate seen in January 2007.
"Outstanding indebtedness on credit cards fell in January, due to the relative weakness in new spending during the month," the bank said.
Funds provided by the bank as part of the European Central Bank's monetary policy operations fell by €8.7 billion in January, with all of the fall being accounted for by main refinancing operations, the bank said.
Credit institutions in Ireland accounted for €222.8 billion of the euro area's broad money supply, a monthly increase of €1.3 billion or 0.6 per cent. The annual rate of increase slipped to 8.7 per cent from 9.6 per cent in December.