Reduction in household lending remained weak last month

Loans to Irish households dropped by 3.7 per cent last month, a repeat of the rate in August.

New figures released by Merrion Stockbrokers described the lending activity as “remaining very weak overall”.

Lending for house purchases, which accounts of 81 per cent of total household loans, dropped by 3 per cent year-on-year for September. Other general lending fell by 6.2 per cent for the same period.

Household loan draw-downs exceeded repayments by €68 million in September with developments in the month driven in the main by a €79 million increase in consumer credit, the first positive number since June last year.

Deposits fell by €185 million, although they have increased by €272 million so far for 2014.

Commenting on the latest data, Merrion said: "Given the very strong GDP/GNP growth numbers for the first half of 2014, one could say that the private-sector credit figures don't matter too much, but from a long-term perspective a greater level of credit will need to flow into the economy to maintain the positive momentum we've seen in Ireland Inc over the last year or so."