Household deposits reached ‘historic high’ last year

Irish household deposits in credit institutions reached an “historic high” of €125 billion at the end of 2020, increasing by €14.2 billion over the year, according to the Central Bank.

Households’ deposits increased by €950 million in December. This compares with a €212 million inflow in the same month in 2019.

The increased savings are unsurprising in the context of widespread Covid-related business closures. Some economists predict an enormous rebound in spending when restrictions are eventually lifted.

The year was also marked by a significant contraction in consumer borrowing, with repayments exceeding new drawdowns by €580 million. This decline in borrowing would have been even more pronounced were it not for payment breaks introduced during the year.

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Lending to households increased during the final quarter of the year, following sluggish growth in the previous quarter, with households drawing down €549 million more than was repaid.

The annual growth rate remained broadly stable over the quarter, and stood at -0.1 per cent at the end of December, reflecting weak lending flows in the first nine months of the year.

Loans for house purchase increased in net terms by €589 million during the final quarter. This compares with a net increase of €643 million in the same period the year before.

The annual growth rate remained broadly stable in the fourth quarter, at 0.9 per cent, but was down from 1.9 per cent a year earlier. Repayments were somewhat suppressed by the introduction of Covid-19 payment breaks during 2020.

Consumer lending

Consumer lending declined over 2020 at an annual rate of 4.5 per cent. This compares with a positive growth rate of 4 per cent a year earlier. Households repaid €5 million more than they drew down in consumer loans in the fourth quarter.

In December, the positive net flows in convenience credit debt and overdrafts were more than offset by declines in term lending and extended credit card debt. Consumer and other household lending declines would have been larger if it was not for the agreement of payment breaks.

Deposits from households continued to reach new heights, and stood at almost €125 billion at the end of December 2020, up €14.2 billion, or 12.8 per cent, on the previous year.

Households’ deposits increased by €950 million in the month of December. This compares with a €212 million inflow in the same month the year before.