Irish household debt continues to decline

The Irish Central Bank has published its Household Credit Market Report for 2019 as well as data and commentary on new mortgage lending under the mortgage measures during the first half of 2019.

The report has found that Household debt-to-disposable-income (DTI) continued to decline, but remains the fifth highest in the EU.  Household debt stood at €136.9bn, or €28,186 per person in Q1 2019.

Whilst the value of new mortgage lending in Q2 2019 was €2.25 billion. First-time-buyers (FTBs) accounted for almost half of new mortgage lending and refinanced mortgages for approximately 14 per cent. The growth rate on consumer credit was 5.6 per cent as at August 2019. Loan terms of 1 to 5 years represent two-thirds of lending.

A total of 18,260 loans were originated by six lending institutions in H1 2019, with a value of €4.2 billion.Sixteen per cent of the value of FTB lending had an allowance to exceed the Loan-to-Income (LTI) limit of 3.5. Less than 1 per cent of the value of FTB lending originated above the LTV limit of 90 per cent.

For Second and Subsequent Buyers (SSBs), 6 per cent of the value of SSB lending had an allowance to exceed the LTI limit, while 16 per cent originated above the LTV limit of 80 per cent. The average LTV for FTBs was 80.7 per cent in H1 2019 up slightly from 79.5 per cent in H1 2018. The average LTI was unchanged at 3.1.

The average LTV for SSBs was 68.1 per cent compared to 66.6 per cent in H1 2018 and the average LTI was unchanged at 2.6. Of the 9 per cent of loans exempt from the regulations, 92 per cent were refinances with no increase in loan size.