Value of personal loans drawn down last year surges to more than €2bn
Volume of car loans was up by over 24%, with close to 58,000 loans issued during last year
The number of personal loans drawn down during 2023 surged by nearly 18% compared to the previous year, with the volume needed for car purchases up significantly.
New figures from the Banking and Payments Federation Ireland show the total number of personal loans issued in 2023 grew to 203,000, worth a combined value of more than €2bn. The total value is 23.3% higher than in 2022.
The surge in lending seen last year was in spite of very high interest rates feeding through from the European Central Bank (ECB). The ECB is due to meet again next month where it is widely expected to announce a rate cut.
Growth was seen across all loan categories, with the volume of car loans up by over 24%, with close to 58,000 loans issued during the year. The volume of home improvement loans grew by 16.8%, to more than 56,000.
The value of loans for other purposes such as education, holidays and special occasions rose by 11.3% year on year to €157m. Other loans volumes rose by 5.3% year-on-year to nearly 20,000.
The data also shows the number of green loans issued by banks increased by 92.4% in 2023 to 4,266. The total value of these loans came to €95m, with the average loan now worth over €21,600 compared to the average of just over €10,000 in 2022.
To be considered a green loan, the money has to be put towards purchasing a “green car” or home energy efficiency improvements. Green loans are designated as such by the lender.
This lending segment is set for further growth following the introduction of the Home Energy Upgrade Scheme by the Government last month. It will offer homeowners low-cost loans to help make their homes warmer and cheaper to run.
Chief executive of the BPFI Brian Hayes said it was “encouraging” to see strong growth in green loans, which continued through the last three months of the year.
Under the Government scheme, new green loans are set to be managed by the Strategic Banking Corporation of Ireland (SBCI). Homeowners can borrow from €5,000 to €75,000 at significantly lower interest rates.
“These loans, in addition to grant support from the Sustainable Energy Authority of Ireland, should help lower the financial barriers encountered by homeowners who want to make their home more energy efficient, making home energy upgrades more accessible and affordable,” Mr Hayes said.
In the last three months of the year alone, there were close to 44,000 personal loans issued, worth €443m.
While this is often considered a weak period for the sector, personal loan drawdown activity rose in volume by 4.2% compared to the same period the year before and by 12.3% in value terms.
The average loan value across all categories rose by €700 to €10,071 compared to the end of 2022. The average car loan was slightly higher at €12,442 and the average home improvement loan also rose to €12,442.
The average loans amount for the purposes of education, holidays, or special occasions stood at €7,900.
