IIB Bank/ESRI launch study on Irish personal borrowing
26 June 2006
The report, entitled ‘In too deep?’, a study of Irish consumer debt prepared by Austin Hughes of IIB Bank and David Duffy of the ESRI, is launched today.
Key Findings of the Report
Among the key findings of the report are;
- The financial position of Irish consumers is very healthy; the value of the houses they own and their deposit accounts exceed their debts by around €440 billion.
- A very strong ‘macro’ position conceals wide differences in personal circumstances.
- An increase in indebtedness and a rising trend in interest rates has caused a notable rise in debt concerns among Irish consumers in early 2006.
- 2 out of 3 Irish borrowers feel their debts are now putting a burden on their household finances.
- The number of borrowers who feel that their debt represents a ‘heavy burden’ has increased notably in the past year. One in six mortgage borrowers and one in five of those with other personal borrowings say their current debt level is a significant concern.
- Financial stresses are greatest for those with relatively modest incomes but because of higher borrowings, sosme of those earning up to €80k also have significant concerns.
- Debt concerns rise with age and tend to peak in the 40 – 50 age groups. This appears to be a decade in which many people are asset rich but cash poor.
- A rising trend in interest rates will hurt Irish borrowers further . Roughly 40 per cent of borrowers reckon their financial position would deteriorate substantially if interest rates rose by 1 per cent. As many as 80,000 borrowers would be hit by another half per cent rise in interest rates. Of these we reckon some 50,000 borrowers who already expressing significant concerns about both household and non-household debt will feel a considerable pinch.