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Irish households owed more than €96bn by end of 2023

As the ECB has hiked interest rates, homeowners have moved away from tracker loans to more predictable fixed rates

Latest figures from the Central Bank show that total lending for house purchases increased by 1.6 per cent in the year last December, with homeowners owing €83.7 billion in total by the end of 2023.

Ellen O’Regan
Thu Apr 4 2024 - 00:00

The total amount of credit outstanding with Irish households reached €96.2 billion in the final month of 2023, increasing by 2.4 per cent annually, as European Central Bank interest rate hikes pushed mortgage holders to ditch tracker rates for longer-term fixed-interest repayments.

Meanwhile, total household deposits grew by 3.2 per cent in the year to December 2023, to a value of €136.9 billion.

[ Euro zone inflation falls more than expected, firming path to June interest rate cut ]

The adjusted quarterly increase in lending transactions between September and December 2023 was €824 million, while the quarterly increase in total deposits was €83 million.

Latest figures from the Central Bank show that total lending for house purchases increased by 1.6 per cent in the year to December, with homeowners owing €83.7 billion by the end of 2023.

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As the ECB introduced a number of interest rate increases since the summer of 2022 to tackle inflation, raising its key rate by 4.5 percentage points, there has been a sharp decline in the number of Irish households with tracker mortgages, as interest rates on mortgage repayments soared.

By December 2023, there was an annual decrease of 18.1 per cent in the value of home loans on tracker rates, down slightly from a peak annual decline of 20.5 per cent in June of last year.

Meanwhile, the value of loans on standard variable rates increased by 5.9 per cent annually, and even more predictable long-term fixed-rate loans saw larger increases.

The value of home loans on fixed rates of more than five years increased by 24.6 per cent in the year to December 2023, while the value of loans on fixed rates of between three and five years grew by 11.5 per cent.

By the end of December, the total value of loans advanced to households to purchase a principal dwelling grew by 2.7 per cent annually, to €80.2 billion.

[ Irish banks’ on-demand deposit rates hit eight-year high ... of 0.13% ]

Meanwhile, there was a fall in the value of loans for buy-to let properties (down 17.4 per cent to €3.3 billion) and holiday homes or second homes (down 20.9 per cent to €170 million).

Loans for other personal reasons, such as investment or other purposes, grew by 8.1 per cent in the year to December 2023, to a total outstanding balance of €12.5 billion.

The household loans and deposits mentioned in the Central Bank’s figures relate to those held by credit institutions in the State, including banks, credit unions and building societies.

Ellen O'Regan

Ellen O’Regan

Ellen O’Regan is an Irish Times journalist.

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