Residential mortgage lending fell by €84 million in August in what was the fifth consecutive month of decline, figures published today show.
Mortgage debt outstanding has now fallen by €132 million so far this year, compared with a €7 billion rise for the same period in 2008, according to statistics from the Central Bank.
The annual rate of increase in outstanding residential mortgages declined to 0.8 per cent in August, from 1.2 per cent in July.
Other mortgages were €205 million lower, term/revolving loans fell by €1.8 billion, while overdrafts decreased by €137 million.
The amount of household credit outstanding fell during August by €469 million, as a fall in consumer credit accompanied the monthly drop in mortgage lending.
There was also a €1.5 billion decline in headline private-sector credit (PSC) in August, which follows July’s €3.4 billion fall in PSC. The Central Bank attributed some two-thirds of the €1.5 billion decline to Valuation effects, such as exchange rate movements, write-downs of loans and increased provisions for bad debts.
"Aside from valuation effects, the underlying stock of credit was marginally lower at end-August compared with end-July. The annual rate of change in headline PSC declined further in August, to minus 3 per cent," the report said.
The amount of outstanding debt on credit cards was €3,042 million for the month of August, according to the Central Bank and Financial Services Authority of Ireland.
Responding to the figures, the Professional Insurance Brokers Association (PIAB) called for measures to promote anti-cyclical lending, to lend during recessions and discourage excessive lending during booms.
Diarmuid Kelly, PIBA chief executive, also said excessively tight lending practices by the banks are endangering recovery and preventing first-time buyers from entering the mortgage market.
“The dramatic fall off in credit points to a new hyper restrictive attitude to mortgage provision amongst the very lending institutions currently in receipt of massive liquidity injections and recapitalisation measures from the Government and the European Central Bank," Mr Kelly said.
“Net mortgage lending dropped by €84 million in August, following a €71m drop in July. These figures support the experience of our brokers throughout the country and clearly illustrate that mortgage provision has reached an untenable low and that credit restrictions have multiplied."