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The volume and value of personal loan drawdowns have hit record levels, as more people seek to borrow money for home improvements and car purchases, new data from the Banking and Payments Federation Ireland (BPFI) shows.
According to the data, between April and June, there were 56,385 personal loan drawdowns, of which 15,811 — up 26.8% compared to the same period last year — were for home improvements, while 15,828 — up 35.9% — were for car or auto finance. The remainder, 24,748 — up 22.5% — were categorised as loans for “other” reasons.
“Other” can include loans for education, holidays, and special occasions such as weddings.
The value of the car loans increased by 47.7% year on year to €189m while the value of home improvement loans increased by 22% to €172m. The value of “other” loans increased 22.6% to €178m.
BPFI chief executive Brian Hayes said that with over 56,000 loan drawdowns worth a combined €539m, this quarter has seen the highest levels since the data series began at the start of 2020.
“The average car loan increased by €955 to €11,922, suggesting that we are seeing not only rising car prices but also an increased consumer appetite for electric and luxury vehicles,” said Mr Hayes.
Car leasing and hire purchase agreements are not included in this data.
CSO data shows that 20,517 new electric cars were registered in Ireland during the first nine months of the year, a 52% increase on the same period in 2022. In total, 36,407 new cars were registered between January and September this year, an increase of 30%.
BPFI data shows that the average home improvement loan decreased in value from €10,967 during the second quarter of 2022 to €10,884 this year.
The average “other” loan increased by €8 to €7,208.
The sharpest increase can be seen in “green personal loans” albeit from a relatively low base compared to other categories.
These loans rose in value by 174.6% to €29.3m between April and June compared to the same period in 2022 while the number of loans jumped by 137.6% to 1,250 over the same period.
The average green loan was also relatively high at €23,419, compared with the average for all loans at €9,562.
A green loan is designated by the lender and can be used for, but is not limited to, the purchase of an electric car or plug-in hybrids as well as home improvements that will increase its energy efficiency.
During the first three months of the year, there were 49,236 personal loan drawdowns worth a combined €481m. This means over €1bn has been lent out during the first six months of the year across 105,000 loans.
Across the entire 2022, there were over 172,000 personal loan drawdowns valued at a combined €1.63bn.
The BPFI data is based on information provided by participating member institutions including AIB, Avant Money, Bank of Ireland, and PTSB. Data from KBC Bank Ireland, up to February this year, was also included but data on lending from credit unions was not included.
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