Personal loans surge as life returns to normal for consumers

The number of consumers that drew down personal loans during the first quarter of this year, as well as the value of those loans, rose by about a third compared with the same period last year as people’s lives began to return to normal following the worst of the Covid-19 pandemic, new figures show.

Banking & Payments Federation Ireland (BPFI) has published its personal loans report for the first quarter of 2022, which shows strong growth in personal loans activity on the same time last year.

A total of 39,524 personal loans were drawn down during the period, valued at €384 million. The average personal loan was €9,963, which was the highest level since the second quarter of last year.

Personal loan drawdown activity rose in volume terms by 36.4 per cent year on year, and increased in value terms by 32.9 per cent over the same period.

The number of home improvement loans rose by 26.2 per cent year on year to 10,837, while the value rose by 31 per cent to €126 million.

A total of 11,901 unsecured car loans were drawn down in the first quarter worth €134 million, with the volume rising by 10.2 per cent year on year and values rising by 14.1 per cent.

The number of loans for education purposes increased by 56.5 per cent to 3,067 in the quarter, while the value increased by 61.5 per cent to €16 million over the same period.

The average loan value rose in most segments between the first quarter of last year and the same period in 2022, with the average home improvement loan up by about €400 to €11,590 and the average car loan by almost €400 to €11,285.

BPFI chief executive Brian Hayes said the rise in drawdowns could be attributed to the fact that Ireland was under lockdown during the same period last year as it sought to curb the spread of the Covid-19 pandemic.

“Of note, are the increases seen in the volumes of home improvement loans, which were up by 26 per cent, and loans for education purposes which jumped by 56 per cent,” he said.

“This is very much reflective of the fact that in the first quarter of 2021 the country was experiencing a lockdown whereas 12 months later life has for the most part returned to normal, construction has resumed and education has returned to the classroom.

“And looking at car loans, where the first quarter of the year is a key period for new car sales, it’s interesting to see that car loans grew by 10.2 per cent with the average car loan having increased by almost €400 to €11,285.”

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