Drawdown of car loans hits record high in first quarter
Strong demand for cars helped drive volumes in the personal loans market during the first three months of the year.
New data released by the Banking and Payments Federation Ireland shows 16,089 car loans valued at €208m were approved over the quarter, an increase of 6.1% in volume and 10.7% in value.
That drove the personal loan drawdowns to €551m, the second highest level since the data series began in the first quarter of 2020.
“The market for new car sales certaintly grew in the first quarter of this year – and it’s a key quarter for the new car industry,” said Anthony O’Brien, Head of Sector Research & Analysis at BPFI.
“But it’s important to remember that a car loan is equally used for second hand cars, and we found in a consumer survey earlier this year that while about 1 in 4 bought a second hand car, fewer than 1 in 5 bought a new car.
“So the second hand car market is very important, and banks and credit union loans helped to support that.”
Just over 20,600 loans were also drawn down for other purposes, including education, holidays and special occasions such as weddings.
That represented an increase of 2.7% in volume year on year, with values rising by 21.1% to €177m over the same period.
Meanwhile the number of home improvement loans fell by 6.7% year on year to 13,009, the value rose by 12.9% to €166m over the same period, BPFI said.
“It’s a little bit surprising to see that the number of home improvement loans fell – we may just be seeing a temporary blip in terms of activity,” Mr O’Brien said.
However he expected to see initiatives around green lending boost this in the coming months.
“What I’d be hoping is that the Home Energy Upgrade Loan Scheme launched by the Government recently will help to drive momentum in the market,” he said. “A number of BPFI member banks have already joined that – we’re expecting other lenders to join that as well.
“That will help people who are trying to bridge the gap between financing significant home retrofits.”
As it stands green lending is already growing rapidly – though it does remain a relatively small market overall.
The BPFI figures show that green personal loans rose to €27.1m in value in the first quarter, an increase of 38% year on year.
The volume jumped by 38.3% over the same period to 1,209.
BPFI said the average green loan was more than twice the value of an average personal loan at €22,432, compared with the average for all loans at €11,062 and an average for car loans of €12,901.
Article Source – Drawdown of car loans hits record high in first quarter – RTE
