Growth in private-sector borrowing eased to its lowest rate so far this year in September as residential mortgage lending moderated slightly, according to the latest figures published by the Central Bank.

The adjusted annual growth rate in private sector credit slipped to 28.1 per cent in September, continuing the slight downward trend recorded since credit growth peaked at 30.3 per cent in June this year.

Nevertheless, demand for credit remained "buoyant", the bank said. In absolute terms, the level of borrowing taken on by Irish businesses and consumers increased by €5.8 billion in September, pushing total private-sector credit over the €300 billion mark.

While the level of outstanding residential mortgages grew by almost €2 billion in September, the underlying annual growth rate dropped - for the fourth consecutive month - to 26.9 per cent.

Rossa White, economist at Davy Stockbrokers, said that despite the moderation in mortgage lending growth, the volume of mortgage approvals remained resilient.

"The slowdown in house price inflation probably accounts for the deceleration in value growth," Mr White explained, adding that lower house price inflation may "sustain volume growth" in the future. The slight lag in the home loans sector was offset by non-mortgage lending, which demonstrated an adjusted year on year increase of 32 per cent in September, up from 31.7 per cent the previous month.

Jim Power, chief economistat Friends First, said that due to recent interest rate rises, the size of mortgages which home buyers can now obtain may be smaller and - according to anecdotal evidence - many individuals are now taking out personal loans to bridge the gap. "I suspect that people may be borrowing elsewhere to top up their mortgages," he said.

Mr White commented that growth levels in non-mortgage credit have been "exceptionally strong" over the last year, and said that there is no sign of this slowing. September's figures suggest that activity in the economy is still robust, he explained, and indicate that small businesses are still borrowing rather than "tightening their belts".

"Clearly most providers are still seeing a lot of demand for credit on a monthly basis," commented Mr Power. However, he warned that the current levels of annual growth in private sector borrowings is "just not sustainable", and predicted that over the next 12 months, the annual growth rate will drop back to below 20 per cent.