‘Green' loans and cars drive record rise in consumer borrowing, but fears raised over possible global downturn
It is the highest personal loan activity since the banks started recording personal borrowing levels in 2020.
These figures come as the Central Bank of Ireland reported there was more than €13bn in outstanding consumer credit at the end of March. This is the highest level since February 2020 when debts were built up during the Celtic Tiger. The vast chunk of current personal loans have repayment terms of more than one, and up to five years.
This means consumers will be repaying them for years with economists warning US tariff and tax policies could trigger a global recession.
Car loans of close to €850m were drawn down last year to fund the purchase of 66,200 vehicles. This was a rise of 14pc on the previous year, with the value of the vehicle loans up by 20pc.
In the last three months of last year almost €200m was borrowed to fund car buying, according to new figures from the Banking and Payments Federation Ireland (BPFI).
The average car loan is now €12,757, up from €12,442 a year earlier.
Loans for home improvements and 'green' home improvement projects all hit new highs.
The BPFI, which represents the banking, payments and fintech sector in Ireland, said borrowing was at its highest since it started recording personal loans in 2020.
Consumers took out just short of 230,000 personal loans last year, adding up to €2.5bn. That was up around 16,000, or 13pc compared with 2023.
The average home improvement loan was €12,086, up from €11,305 in 2023. The number of home improvement loans, at 15,033, was up 22pc year-on-year, amounting to €182m.
The figures come as the Central Bank of Ireland reported that outstanding consumer credit stood at €13bn at the end of March this year, the highest it's been since February 2020.
Brian Hayes, chief executive of the Banking and Payments Federation Ireland, said the rapid increase in personal debt reflected growing consumer confidence.
'Annual figures show that the total number of personal loan drawdowns in 2024 was 229,423 valued at nearly €2.5bn, an increase of 13pc and 21.6pc in volume and value respectively compared to 2023, and the highest activity levels since the data series began in 2020.'
But Michael Kilcoyne, chairman of the Consumers' Association of Ireland, a voluntary lobby group, sounded a note of caution. 'I don't know that it is wise for so many people to be taking out personal loans given the global economic uncertainty out there,' he said.
He questioned if people should be borrowing for holidays when there was a threat to the corporation tax take here from Donald Trump's tariff plans, and his calls for pharmaceutical companies to 'reshore' operations to the US.
Mr Kilcoyne said: 'We are facing a period of huge uncertainty.'
Mr Hayes said each category of personal lending has reached its highest level.
'Looking more closely at key categories, each segment reached its highest volume and value in annual terms, with other loan activity – including education, holidays and special occasions such as weddings – more than doubling since 2020.'
The banks said the value of green personal loans jumped by 56.8pc since 2023 to €30.2m in the last quarter of 2024.
In number, green loans rose by 48.7pc over the same period to a total of 1,326.
The average green loan was 'relatively high' at €22,795 in quarter four, with more than twice the average of €10,425 for all loans in the same quarter, Mr Hayes said.
'It is encouraging to see a continued rise in demand for green personal loans with 5,178 green personal loans valued at €120m in 2024,' Mr Hayes added.
Independent economist Austin Hughes said the record lending levels were keeping pace with pay rises.
'These numbers aren't as staggering or as threatening as first appears.
'Overall, non-mortgage consumer debt rose slightly less than household incomes last year as new lending only slightly exceeded maturing loans.'
Mr Hughes said there was little indication of any return to Celtic Tiger norms despite the sharp increase in new borrowing.
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