Debt service capacity across Irish borrowers: New survey evidence

Anuj Pratap Singh and Fang Yao
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Anuj Pratap Singh: Central Bank of Ireland
Fang Yao: Central Bank of Ireland

No 8/FS/23, Financial Stability Notes from Central Bank of Ireland

Abstract: How has debt service capacity of Irish households evolved in the inflationary and rising interest rate environment? Survey data from September 2023 shows that the majority of household borrowers remain resilient in this environment, but a considerable proportion remain at risk due to low levels of liquid savings useable for debt servicing. We find that one in two mortgage borrowers report having less than three months of savings to service their debts in the event of prolonged income loss. This may be driven by difficulty in saving, as we find 31 per cent of mortgage borrowers report zero monthly savings out of income, while 51 per cent report zero excess savings accumulated during the pandemic. Moreover, the survey suggests that vulnerable borrowers may be more likely to enter arrears or take on further debts if the economic environment stays the same or worsens.

Date: 2023-11
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