Household savings growing at slowest rate in five years
Savings Of October, To €89m The Picture: Household Declined During Istock Total Value €153bn By
Household savings grew at the slowest rate in five years in the 12 months to October adding just €4.1bn in value during that time, new Central Bank of Ireland figures shows.
The figures suggest that the savings boom seen during the pandemic has tapered off with the total value of savings declining last month and consumer lending increasing.
During October, the total value of household savings declined by €89m to €153bn. The Central Bank said that the yearly growth rate of these savings slowed to 2.8% with €4.1bn being added which is the “lowest annual inflow of household deposits in five years”.
Annual consumer lending increased by 7.9% to €912m marking the highest annual growth rate since October 2008.
This growth was driven by term loans, as opposed to overdrafts and credit card debt which have grown more slowly.
Economist Austin Hughes said despite the increase in lending last month there is no sense that there is a “borrowing boom” going on as there were significantly higher rates of borrowing during 2008 and 2009.
“What’s happening, and I think you see it in consumer sentiment as well, that there is a slightly less fearful view of the economy and people are thinking about either changing the car, changing the furniture or getting a new kitchen, those sort of things,” he said.
Mr Hughes added the same can be seen in the deposits where they may be using deposits for similar purchases or to buy homes.
“There also may be hints of some slow down in earnings growth in the economy because it is in overnight deposits,” he said.