Household deposits reach 15-year high

Irish household deposits reached a new high in June, as savers continue to eschewed potential gains in the stock markets in favour of earning negligible – but guaranteed – amounts on deposit.

According to figures from the Central Bank published on Tuesday, household deposits rose by €850 million during the second quarter of the year, up 3 per cent on the year to June, to €96.2 billion. This was the 15th consecutive quarter of annual growth, and marks a new record for Irish deposits since the series began in 2003.

The figures also show that mortgage lending increased by €206 million, up by 0.7 per cent, or €524 million, on the year. According to the Central Bank, this is the highest increase since 2009.

Lending for family homes increased for the ninth consecutive quarter, recording the largest net increase since the series began in March 2011, up €830 million over the second quarter. Buy-to-let lending, on the other hand, fell by €608 million, the biggest decline since the series began.

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Fixed rates

Irish home buyers and home owners are increasingly switching to fixed rate mortgages – which often offer the best value in today’s market – the figures show. Fixed-rate lending rose on an annual basis by 46.4 per cent, while variable rate lending fell by € 1.4 billion.

Fixed-rate mortgages now account for about 24 per cent of the family home market, with new drawdowns exceeding repayments by €1.6 billion in the second quarter of the year.

“This marked the most pronounced increase since the series began,” the Central Bank said.

Other personal lending increased by €61 million over the quarter, following two consecutive quarters of negative transactions.

The figures also point to further signs that leveraged investors are not participating in the property market. According to the Central Bank, investment mortgages fell by €1.5 billion, or 12.6 per cent, in the year to June. Variable rate loans fell 5.4 per cent, on the back of investors paying down, or off, their tracker loans, while there was a decline of 2.7 per cent in fixed-rate investment mortgages.