Household debt continues to decline but remains fifth highest in the EU

• Today, the Central Bank has published the Household Credit Market Report for 2019 as well as data and commentary on new mortgage lending under the mortgage measures during the first half of 2019.
• The value of new mortgage lending in Q2 2019 was €2.25 billion. First-time-buyers (FTBs) accounted for almost half of new mortgage lending and refinanced mortgages for approximately 14 per cent.
• The share of new private dwelling home (PDH) lending fixed for 5 years or more increased from 15 per cent in 2017 to 33 per cent in H1 2019.

The Central Bank has published the Household Credit Market Report 2019, providing a deep-dive into the overall household credit market for 2019. The Central Bank has also released a dataset relating specifically to new mortgage lending under the mortgage measures during the first half of 2019.

The Household Credit Market Report for 2019, provides an up-to-date picture of developments in the household credit market in Ireland. The key findings of the report are as follows:

• Household debt-to-disposable-income (DTI) continued to decline, but remains the fifth highest in the EU.Household debt stood at €136.9bn, or €28,186 per person in Q1 2019.
• The value of new mortgage lending in Q2 2019 was €2.25 billion. First-time-buyers (FTBs) accounted for almost half of new mortgage lending and refinanced mortgages for approximately 14 per cent.
• On average, Dublin FTBs spend a quarter of their net monthly income on mortgage repayments while FTBs outside of Dublin spend a fifth. Approximately 40 per cent of new FTB lending outside Dublin was for a detached property, compared to 5 per cent in Dublin.
• 40 per cent of FTBs in H1 2019 had a loan term greater than 30 years.
• The share of new lending originated to borrowers aged 30 and under has declined from a just under a third in 2006 to 14 per cent in H1 2019.
• The share of new private dwelling home (PDH) lending fixed for 5 years or more increased from 15 per cent in 2017 to 33 per cent in H1 2019.
• The growth rate on consumer credit was 5.6 per cent as at August 2019. Loan terms of 1 to 5 years represent two-thirds of lending.
• As at December 2018, the average current loan-to-value (CLTV) for performing PDH loans originated in 2007 was approximately 58 per cent.These borrowers represented 10 per cent of outstanding performing mortgages as at December 2018.

The Central Bank has also published data and commentary on new mortgage lending under the macroprudential measures in H1 2019. Six lending institutions submitted data to the Central Bank of Ireland on lending in H1 2019. Among its findings, the data reports that:

• A total of 18,260 loans were originated by six lending institutions in H1 2019, with a value of €4.2 billion.
• Sixteen per cent of the value of FTB lending had an allowance to exceed the Loan-to-Income (LTI) limit of 3.5. Less than 1 per cent of the value of FTB lending originated above the LTV limit of 90 per cent.
• For Second and Subsequent Buyers (SSBs), 6 per cent of the value of SSB lending had an allowance to exceed the LTI limit, while 16 per cent originated above the LTV limit of 80 per cent.
• The average LTV for FTBs was 80.7 per cent in H1 2019 up slightly from 79.5 per cent in H1 2018. The average LTI was unchanged at 3.1.
• The average LTV for SSBs was 68.1 per cent compared to 66.6 per cent in H1 2018 and the average LTI was unchanged at 2.6.

Of the 9 per cent of loans exempt from the regulations, 92 per cent were refinances with no increase in loan size.