Could Falling Mortgages Mean Celtic Tiger Is Tamed?

New mortgages have fallen by a quarter, an indication of a slowdown in the overall housing market and of a sluggish Irish economy - leaving the construction industry vulnerable.

The number of new mortgages issued in the Republic of Ireland fell 25% in the three months to the end of September, new figures show.

Some 40,992 new mortgages were issued - which is down from 54,623 mortgages a year ago - the Irish Banking Federation/PwC Mortgage Market Profile figures showed.


Mortgage lending dropped 18% to €8.98bn (£6.5bn; $13.4bn) from the same quarter a year ago.

While overall house prices have quadrupled in the past decade, and that economic success given Ireland its Celtic tiger name, that has also brought higher interest rates and those are now influencing borrowers' decisions to 'stay put', the report said.

Interest rates in the eurozone are 4%, following successive rate increases by the European Central Bank.

Therefore, a slowdown in the housing sector may feed into the wider Irish economy, analysts said.

The obvious casualty will be the building industry, since, last year, construction alone accounted for almost a quarter of Ireland's gross national product - and any slow down would be felt there more quickly than any other commercial sector.

(BMcC)