Significant Increase in Car and Home Improvement Loans In Q1

The volume and value of car and home improvement loans surged as personal lending hit €481m in the first quarter of the year, according to the Banking & Payments Federation Ireland (BPFI).

A total of 15,167 car loans worth €187m were drawn down in Q1, up 27.4% in volume and 39.6% in value year-on-year, while the number of home improvement loans rose 28.7% to 13,950 worth €147m (+17.2%).

The levels of car and home improvement loan activity were the highest since Q1 2020, prior to the pandemic, while the value of personal loan drawdowns rose by more than 5% in year-on-year terms for the eighth successive quarter.

The number of loans for education, holiday and special occasions such as weddings increased by 27.4% to 20,119 in Q1, while the value increased by 17.9% to €146m.

The value of green personal loans almost doubled to €19.7m in Q1, an increase of 94.5% year on year. The number of green loans jumped by 82.1% over the same period to 874.

The average green loan is relatively high at €22,486 in Q1 2023, compared with the average for all loans at €9,763, the lowest level since Q4 2021, although the average car or auto finance loans rose by more than €1,000 to €11,678.

Brian Hayes, CEO of the BPFI, said the rise in the average value of car loans reflected rising car prices and growth in electric and plug-in hybrid vehicles.

“Our latest report shows a considerable jump in personal lending in the first quarter of 2023 with growth in lending across all categories from car and home improvement loans to loans for other purposes such as holidays and special occasions,” said Hays.

“In particular we have seen a significant rise in car loans values which grew by 39.6% to €187m.

“And while the average loan value fell overall by about €200 to €9,763, the lowest level since Q4 2021, the average car or auto finance loan rose by €1,073 to €11,678, likely reflecting rising car prices and growth in electric and plug-in hybrid vehicles.”

The average value of home improvement loans was €10,552, down from €11,590 a year earlier, while the average value of loans for education, holidays and special occasions declined slightly from €7,851 to €7,260.

(Pic: Getty Images)