Month after month, figures released by the Central Bank tell the same story - our borrowing is reaching extreme levels.

Data released on Tuesday shows the volume of private sector credit (business and consumer borrowing) running 25.4 per cent ahead of levels recorded a year ago.

Mortgage borrowing accounts for much of this, but other borrowings - car and holiday loans - make a contribution to the whole. And this is no small whole; Irish private sector credit is growing about four times faster than any other euro-zone country.

This means that a large proportion of us are comfortable with borrowing from banks and building societies. While there is nothing wrong with such an attitude to credit, it presents Irish consumers with issues that never troubled their ancestors. Chief among these will be the ability to repay an array of different loans that carry differing interest rates and run for differing terms.

One lender that has identified this area as a source of new business is First Active, which recently launched its Refinance mortgage. This product aims to achieve what many financial advisers have been advocating for years - the consolidation of an individual's various loans.

Loan consolidation has been viewed by financial watchdogs as something better avoided, at least by the financially naïve. This advice, recently reiterated by the financial regulator, IFSRA, is based on a fear that short-term credit commitments will be consolidated with long-term loans. The fear is that a borrower will end up paying back a loan that should be forgotten within five years until the end of their working life. Not only could this be more expensive than an individual's pre-consolidation borrowings, but it could also lead to serious stress, as financial commitments linger for what will seem like forever.

It is also true, however, that debt consolidation can save money for consumers, provided it is used properly. The main reason for this is that short term loans tend to carry higher interest rates than mortgages. If they can be brought in under the mortgage's roof and paid off over the short term however, they will be substantially cheaper.

First Active provides a few illustrations. The lender takes the example of somebody who has a mortgage of €100,000 over 20 years at 3.6 per cent, a home improvement loan of €30,000 over the same period and with the same rate, a car loan of €18,000 over five years at 8.45 per cent and a personal loan of €10,000 over five years at 10.75 per cent. Combined monthly repayments are €1,335.83. If all four loans were consolidated into the mortgage at 3.6 per cent, they would all be paid off over 15 years with monthly repayments of €1,131.84. This would lead to an overall saving of about €12,500.

Those who prefer not to extend the term of their five-year borrowings can take another option - the split-term Refinance mortgage. Under this, the two home-related loans are brought down to an 18-year term, while the remaining two would be repaid over five years (one year is the minimum) at 3.6 per cent. This would involve monthly repayments of €1,323.83 and would knock €9,807 off interest costs over the term of all loans.