Mortgage lending rose sharply towards the end of last year, according to the latest figures from the Central Bank. They show annual growth in mortgage lending at 23.1 per cent last month, up from 21.8 per cent the previous month and the fastest annual growth rate since January 2001.
The sharp rise in mortgage lending was the main factor behind an increase in the pace of overall lending growth in December. Total private-sector credit was 15 per cent ahead of the same month last year, up from an annual rate of 13.9 per cent the previous month. Excluding residential mortgages, the annual growth rate last month falls to 9 per cent, compared to 8.1 per cent in November.
Encouraged by lower interest rates, the demand for mortgages in December rose sharply. An additional €1.2 billion in mortgage loans were extended during the month, bringing total outstanding loans in this area to €43.4 billion.
Short-term loans of up to one year were the other main growth area, rising by €1.4 billion during December to €16.8 billion.
Most other areas of credit showed a fall-off, with monthly declines in overdrafts, repurchase agreements and term/revolving loans.
Looking at bank deposits, the figures indicate that pre-Budget fears of a cap being imposed on Special Savings Incentives Accounts (SSIAs) led many savers to increase their contributions. SSIA deposits rose by some €129 million in December to €1.5 billion.
This is some €5 million to €6 million greater than the typical monthly increase between April and October, reflecting a rush to "top-up" before the Budget. In the event, no measures were taken on Budget day to change the rules governing these accounts.
