Household Credit Market Report 2 2016

• Household debt sustainability in Ireland continues to improve with both debt-to-income and debt-to-asset levels decreasing.  However, Irish household indebtedness remains high in a European context.
• The value and number of new mortgage loans increased year-on-year in Q3 2016 by 17 per cent and 12 per cent respectively. The largest share of new lending, circa 48 per cent, went to first-time buyers.
• The standard variable rate on new lending for principal dwelling house mortgages stood at 3.6 per cent in Q2 2016, down from 4.13 per cent in Q2 2015.

The Central Bank of Ireland today published the latest Household Credit Market Report H2 2016.  The report collates information from internal and external sources to give an up-to-date picture of developments in the household credit market in Ireland.

The report finds that household debt sustainability in Ireland continues to improve. It also finds that the overall value of mortgages in arrears continues to decline, falling to €17.6bn in Q2 2016, down from €19.9bn in Q2 2015 and the peak of €27.66bn in Q3 2013.  The Q2 2016 figure represents approximately 14.3 per cent of total mortgage balances.

The report also features three boxes.

Box 1: The Financial Resilience of Mortgaged Irish Households, which carries out an exercise that shows the Irish mortgage market has become more resilient in the aftermath of the crisis.

Box 2: Monitoring Template Data of the Central Bank of Ireland, which presents new loan-level data submitted to the Central Bank following the introduction of the macroprudential mortgage measures in 2015. These measures were introduced to protect households against over-indebtedness and safeguard the stability of the banking system, in line with the Central Bank’s mission of safeguarding stability, protecting consumers.

Box 3: Mortgage Default: A European Comparison, which contextualises the level of mortgage default at Irish banks from a European perspective. 

Notes

The report uses data drawn from Central Bank of Ireland Credit, Money and Banking, Retail Interest Rates, Quarterly Financial Accounts and Mortgage Arrears aggregate statistics, loan-level data collected by the Central Bank of Ireland from the Irish domestic banks, and the Banking and Payments Federation of Ireland.

The published Central Bank datasets are:

Central Bank of Ireland – Private Household Credit

Central Bank Quarterly Financial Accounts

Central Bank Retail Interest Rate Statistics

Central Bank Mortgage Arrears Data

Data behind the charts is available on request from [email protected]