Overall non-performing consumer loans at banks and credit unions remain near recent historical lows, despite a slight increase observed in new early arrears cases.
That is according to a new analysis of the consumer credit market by the Central Bank, which also found that consumer debt servicing costs have not increased significantly since the ECB started to raise interest rates in July 2022.
The paper, by Edward Gaffney and Paul Lyons, explains that the non-mortgage consumer credit market represents just over one-tenth of all household credit in Ireland. €10.8 billion was owed on personal loans, €4.8 billion on asset finance and €2.2 billion on cards and overdrafts at the end of December last year.
The most common purposes for consumer credit are spending on cars, including through Personal Contract Plans, Hire Purchase agreements and personal loans, as well as for home improvements. The authors outline how indebtedness among Irish households peaked prior to the financial crisis of 2008 and last year outstanding household credit was approximately one-third below the peak in euro value terms, and even lower in per capita terms.Kevin Johnson, CEO of the Credit Union Development Association , said it was no surprise to the credit union movement that they are the main lender for personal loan products.
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