Irish household deposits with banks increased by €1.3 billion to a record €167 billion during July, driven by money going into on-demand or current accounts, as flows into term savings accounts with agreed maturity of up to two years eased, according to Central Bank figures.
Banks have been surprised in recent years by the slow pace at which households have put money into term accounts even as they raised headline savings rates to as much as 3 per cent in response to European Central Bank (ECB) official deposit rates rising to a peak of 4 per cent.
The ECB has cut its deposit rate by 2 percentage points since June last year, resulting in banks reducing rates on certain savings products.
The latest Central Bank money and banking statistics, published on Friday, show that overnight, or on-demand, household deposits rose by €845 million during July, while deposits redeemable at notice increased by €264 million.
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The institution said that the increase in the latter was “significant”, given that typically well under €50 million flows into notice accounts.
Some €200 million of household money was put into term accounts of up to two years.
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On an annual basis, household deposits increased by €11.1 billion, or 7.1 per cent, according to the latest data.
Annual flows of deposits with an agreed maturity up to two years peaked at €8.3 billion in August last year, and stood at €5.7 billion in the year to end-July.
At the end of July, 85 per cent of the €167 billion of total household deposits were in overnight accounts, earning little or nothing for customers. Household deposits are currently more than double the level at which they stood at the end of 2007, before the financial crisis.
Deposits from non-financial companies rose by €281 million in July to stand at €82 billion.
Net lending to households was €624 million in July, mostly driven by loans for house purchase. In annual terms, lending to households increased by slightly under €4.5 billion, or 4.3 per cent.
Net lending to non-financial corporations turned negative in July, recording a negative flow worth €390 million, down from a positive flow of €274 million in June. The decline was driven by short-term loans, the regulator said.
