Irish credit growth rises but mortgages at fresh low

By Jonathan Saul

DUBLIN (Reuters) - Lending to Ireland's private sector grew faster for the first time in eight months in March but a slowing property market knocked mortgage growth to its lowest annual level in almost 16 years.

Overall private sector credit growth rose to an annual rate of 17.1 percent last month from 15.6 percent in February and was the first increase since July 2007, data from the Central Bank of Ireland showed on Wednesday.

That was well below a peak of 30.3 percent hit in June 2006 when the central bank warned Ireland's then booming property market was fuelling unsustainably high lending.

Private sector credit rose by 5.3 billion euros (4.2 billion pounds) or 1.4 percent in March, bringing the total outstanding to 384.3 billion euros.

The central bank said month-on-month increases in loans have been subdued since the start of this year. Loans are the biggest element of private sector credit.

But in March there was an "exceptionally large increase" in the holdings of securities, which form another component of private sector credit.

"Credit institutions' purchases of securities were also reflected in a reversal in the trend of the non-mortgage credit growth, with the annual rate rising to 20.8 per cent in March, from a revised 18.9 per cent in February," the bank said.

"This was the first time that the non-mortgage credit rate increased in over a year," it said.