New mortgage loans exceed repayments for first time in June

Loans to households for house purchase in the Republic “turned positive” for the first time in over a decade in June despite the uptick in interest rates, according to new figures from the Central Bank.

The regulator said the annual growth in loans to households for house purchase turned positive for the year to the end of June with gross new mortgage lending exceeding repayments in the period.

“This marks the first positive value in the series which has been published since 2015, and is partly due to gross new lending volumes (excluding renegotiations) reaching series highs on an annual basis,” it said.

Until June, households here had been paying down existing mortgage loans at a greater rate than drawing down new ones.

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A spokesman noted that the total volume of pure new mortgage agreements amounted to €869 million in May, a 9 per cent increase on the previous month, and an increase of 25 per cent in annual terms.

“On a trailing 12-month basis pure new mortgage agreements totalled €11.7 billion, a figure which has been steadily increasing over the previous months,” he said.

The Central Bank data indicated that net lending (the amount new lending versus the amount of existing loans paid down) to households was €234 million during June, following a net lending figure of €114 million in May.

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“End-quarter months like June, however, generally see larger than average increases due to seasonal statistical impacts,” it said.

Annually on-balance sheet household loans increased by €610 million, a third consecutive increase, and was the largest increase recorded since mid-2020, it said.

The annual change in loans for house purchase, when including both on-balance sheet and securitised loans, increased by 0.3 per cent in June, it said.

Households’ deposits, a proxy for savings, increased by €930 million in June, reversing the decline of €652 million seen in May, the Central Bank said. In annual terms deposits increased by €7.1 billion or 4.9 per cent, it said.

One of the more pronounced trends seen during the pandemic was the increase in savings.