Fears are being expressed for the level of debt held by young households in Ireland.
New figures have been published on the wealth of Irish households for the first time in about 20 years.
57% have some form of debt – with €1,000 euro the mid-point owed on overdrafts – and €1,400 on credit cards.
70% of us own a home – but perhaps surprisingly, only one in three of us still has a mortgage.
Irish people are good savers too – with 89% of households having some savings – the median value of which is €4,500.
Dr Sean Healy, of Social Justice Ireland, said this is far too low for a rainy day.
“Half the households in Ireland have less than €4,500 in savings. This is a very, very small amount of money to face an emergency.
“Very often, people are struggling because of the fact that they have no asset or no savings.”
However, the debt burden is heaviest on the young. While many 30-34 year olds have low mortgage rates, the Central Bank says if rates go up in the medium term, it will cause huge problems.
Yesterday the Central Bank recommended that banks lend no more than 3.5 times a household’s income.
Economist with the Central Bank Reamonn Lydon says many young people owe more than that;
“We have a very high number of households who are actually above four and five [times their income].
“[They] bought at very high prices, took out large debts, and their incomes have declined. There is a very large debt burden for a particular cohort of buyers.”
Lydon said if interest rates go up, 30-34 year olds are vulnerable, particularly in the case of those with tracker mortgages that are currently cheap.