The rate of expansion in residential mortgage debt in Ireland is astounding. Figures from the Central Statistics Office show that the rate of growth reached 29.4% in February, with €2.91 billion borrowed. However this is not a record that honour falls to the month of December last, when €3,500,000,000 was borrowed, in one month. That's a hard figure to get your head around, so think about it terms of one Euro coins. A one Euro coin weighs 7.5 grams and has a diameter of 23.25 mm. If the banks doled out mortgage debt in coinage they would have had to transport 26,250 tonnes of it last December alone; enough to fill nine hundred three axel trucks. Laid side to side 3,500,000,000 Euro coins would stretch around the globe a little over twice.
While the monthly mortgage debt creation figures are breathtaking, the rate at which this debt is growing is mind-boggling. As house prices rise the amount of debt required to buy increases. In 2002 the rate of growth was 11%; in 2003 12.9% , in 2004 23%, in 2005 26% and the latest figure for this year is 29.4%. As the debt rises ever higher the trajectory steepens more and more.
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Just to note that the astounding figure of 3.5 Billion in December was distorted by the banks reclassifying approx 1 Billion in debt as mortgage debt which was then added to that monthly figure. This debt had actually been accumulated earlier in the year so it makes the figure a little less unrealistic.
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