Introduction to Irish Household Debt
Irish household debt has seen a significant increase of nearly €2bn in the year to the end of March. This rise is largely attributed to the growth in mortgage debt held by banks, which increased by over 3%. According to new data from the Central Bank of Ireland, the total value of outstanding loans held by Irish households stands at €155.3bn as of the end of March.
Breakdown of Household Debt
The breakdown of household debt reveals that banks are the largest domestic lenders to Irish households, accounting for €104.5bn of the total debt. Mortgages make up the bulk of total household loans, accounting for 75% of the total as of the end of March. This share has remained steady in recent quarters, indicating a consistent trend in mortgage borrowing.
Mortgage Debt Held by Banks
The value of mortgage loans held by banks stood at just under €84bn as of the end of March, representing a 3.75% year-on-year increase. Other household loans, which include personal loans and credit card debt, stood at just under €18bn, up 3% year-on-year. This increase in mortgage debt held by banks suggests that more people are turning to banks for mortgage financing.
Role of Other Financial Institutions
Other financial institutions held €21.85bn in home loans as of the end of March, down 4% from the previous year. Despite this decline, these institutions remain a significant player in the mortgage market, particularly in the provision of buy-to-let mortgages. They account for 76% of buy-to-let mortgages, compared to 24% provided by banks. The total buy-to-let mortgage debt as of the end of March stood at €7.88bn.
Impact of Non-Bank Lenders
The presence of non-bank lenders in the Irish mortgage market is helping to fill a gap in the market. According to Donal Magee, senior underwriter with Núa Money, non-bank lenders are ensuring that more people can access mortgage credit, particularly those whose circumstances fall outside the narrow criteria of the banks. This suggests that non-bank lenders are playing a crucial role in helping individuals and families achieve their housing goals.
Conclusion
The increase in Irish household debt, driven largely by growth in mortgage debt held by banks, highlights the importance of monitoring debt levels and ensuring that borrowing remains sustainable. The role of non-bank lenders in providing mortgage credit to those who may not qualify for bank financing is also significant. As the Irish mortgage market continues to evolve, it is likely that we will see further growth in mortgage debt and an increasing presence of non-bank lenders in the market.
