Trends in Personal Credit and Deposits: Q1 2011 

Information release 28 June 2011

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This is the first release of a new quarterly statistical series detailing developments in the credit advanced to, and deposits received from, Irish private households (i.e. personal customers) by credit institutions resident in the Republic of Ireland.[1]  Developments in lending for house purchase is disaggregated by the type (e.g. variable rate, tracker rate, fixed rate) and purpose of the loan (principal dwelling, buy-to-let, holiday/second home).

Private households (personal customers) are included in the Household category in the monthly series Money and Banking Statistics, but are not separately identified on a monthly basis from sole-traders, partnerships and other non-incorporated enterprises, and not-for-profit institutions.  For example, at end-March the outstanding amount of credit advanced to Households in Money and Banking Statistics was €130.5 billion, whereas credit advanced to Irish resident private households as presented in Personal Credit and Deposits was €119.6 billion.  The difference between the two figures arises due to the inclusion of non-incorporated enterprises and not-for-profit institutions in the Money and Banking Statistics Households category.  Similarly, Household deposits in Money and Banking Statistics at end-March were €92.8 billion, compared with private household deposits in Personal Credit and Deposits of €87.5 billion.

The total credit advanced to Irish private households of €119.6 billion on the balance sheet of resident credit institutions at end-March 2011 follows a quarterly decline of 1.3 per cent and an annual decline of 3.3 per cent.  Including loans for house purchase that have been securitised and continue to be serviced by resident credit institutions, the total amount of loans to private households outstanding at end-March 2011 was €154.7 billion.

Credit Advanced to Private Households – Loans for house purchase[2]

• The annual rate of change in loans for house purchase was minus 2.6 per cent at end-March 2011. This follows a quarterly decline of 0.6 per cent, the fifth quarterly decline in a row, bringing the outstanding amount of loans for house purchase on-balance sheet to €98.9 billion. The outstanding amount of securitised mortgages was €35.1 billion at end-March.
• Floating rate mortgages, which include standard variable rate, tracker rate, and mortgages with a fixed rate up to one year[3], accounted for 86 per cent of the outstanding amount of loans for house purchase on-balance sheet at end-March 2011.  Tracker mortgages by themselves accounted for 53.4 per cent of outstanding loans for house purchase to Irish residents on the credit institutions’ balance sheet.
• The share of fixed rate mortgages in the outstanding amount of loans for house purchase rose during Q1 2011, as there was a net increase of just over €1 billion in fixed rate mortgages during the quarter, whereas floating rate mortgages declined by almost €1.7 billion.
• Loans for principal dwellings accounted for 74 per cent of on-balance sheet loans for house purchase at end-March.  This share has been increasing since end-2009.  The amount of loans for principal dwellings declined over Q1 2011 by €54 million, as a net flow of minus €977 million of floating rate loans (1.6 per cent) was only partially offset by a rise of €923 million in fixed rate loans (8.5 per cent).  Floating rate mortgages accounted for 83.9 per cent of the outstanding amount of loans for house purchase at end-March (32 per cent standard variable, 50.2 per cent trackers, 1.6 per cent up to 1 year fixed).
• The outstanding amount of on-balance sheet loans for buy-to-let residential properties was €24.6 billion at end-March, accounting for 24.9 per cent of all loans for house purchase. There was a decline of €559 million in these loans during Q1 2011 (2.2 per cent).  Floating rate mortgages accounted for 92 per cent of the outstanding amount of loans for buy-to-let residential properties at end-March (28.1 per cent standard variable, 63.7 per cent trackers, 0.2 per cent up to 1 year fixed).

Credit Advanced to Private Households – Other lending

• Non-housing related lending, or ‘other personal’ lending, accounted for 17.3 per cent (€20.7 billion) of total on-balance sheet credit advanced to Irish private households by resident credit institutions at end-March 2011.
• Lending in this category fell by 5.8 per cent in the year ending March 2011. This followed annual declines of 6.5 per cent at end-December 2010 and 15.6 per cent at end-September 2010.
• Other personal lending declined by €998 million during Q1 2011 (4.4 per cent). Underlying this, finance for investment purposes was €77 million lower (2.7 per cent) and finance for consumption and other purposes was €921 million lower (4.7 per cent).

Deposits From Private Households

• The deposits held in resident credit institutions by Irish private households stood at €87.5 billion at end-March 2011. This followed a decline of €1.7 billion (1.9 per cent) during Q1 2011 and almost €2 billion (2.1 per cent) during Q4 2010.
• The outstanding amount of personal deposits was 6.2 per cent lower on annual basis at end-March 2011, compared with annual rates of decline of 0.5 per cent and 5.2 per cent at end-March and end-December 2010, respectively
• The net flow of personal deposits in the year ending March 2011 was minus 5.8 billion.
  

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