Car purchases and home improvements helped drive a surge in new personal loans last year to a record €2.9 billion, according to Banking & Payments Federation Ireland (BPFI), as consumers shrugged off concerns about the cost of living and trade tensions.
In total, 78,977 car loans valued a total of more than €1.02 billion were issued by lenders in Ireland last year, marking a 19.3 per cent increase in volume and 18.6 per cent jump in value, the industry representative group said.
Home improvement loan volumes rose 14 per cent to 68,750, while the value of such lending increased by 15.2 per cent to €868 million.
Other loans, including debt taken on for education, holidays and special occasions such as weddings, was up 21.7 per cent to 125,523 agreements. They grew at a similar pace, by value, to €1.02 billion.
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“Record drawdowns of personal loans in 2025 points to strong consumer confidence with many households continuing to seek finance to invest in major life purchases,” BPFI chief executive Brian Hayes said.
“While volumes and values were up across the board, in annual terms, the average loan fell by €32 to €10,644 in 2025, while the average car loan fell by €73 during 2025 to €12,853. In contrast, the average home improvement loan rose by €129 to €12,631.”
The surge in personal lending last year occurred against the backdrop of declining official interest rates, with the European Central Bank (ECB) reducing its headline deposit rate from 3 per cent to 2 per cent in the first six months of the year.
The rate had stood at a peak of 4 per cent in September 2024, before the ECB concluded that it was winning a war against inflation and loosened its monetary policy.
However, official surveys showed that Irish consumer sentiment was subdued for much of 2025 due to elevated living costs and households fretting about US trade policies.
Irish consumer confidence has subsequently fallen its lowest level since in more than three years, as of April, as continuing volatility in the Middle East translated into further increases in retail fuel costs, an Irish League of Credit Unions survey published last week said.
Nevertheless, AIB and Bank of Ireland said last week they had not yet detected any significant changes in customer activity since the outbreak of the US and Israeli war on Iran in late February.
