Household debt falls to lowest level since 2006

The debt of Irish households fell to its lowest level since late 2006 during the second quarter of the year, falling by €1.7 billion to stand at €170.3 billion. This represents debt per head of € 37,135 and is 16.4 per cent below the peak of €203.8 billion reached during 2008. Debt as a proportion of disposable income fell to 198.3 per cent, its lowest level since the first quarter of 2007.

Concurrently, the wealth of Irish households has also improved, with quarterly accounts from the Central Bank showing that household wealth increased by € 6.5 billion during the period under review to stand at €471.6 billion. Per household, this corresponds to a net worth of € 102,852 per capita.

The survey also shows that the Irish economy moved from being a net borrower to a net lender during the quarter under review, as the combined net lending of households, financial institutions and companies outstripped the net borrowing of government.

Total government debt continued to rise during the second quarter, increasing by 0.06 per cent to €229 billion.

Companies’ borrowings continued to fall during the period under review, declining by €10.3 billion over the quarter to stand at €357 billion. This is the third consecutive quarter where there has been a decline in debt. However, Irish companies continued to be the second most indebted in the EU during the second quarter, behind Luxembourg.