Lending activity hit a four-year low in November, according to new data released by the Central Bank.

The adjusted annual rate of growth of private sector credit dropped to 17.1 per cent in November from 18.5 per cent in October. This is the lowest annual rate since October 2003.

The total outstanding credit rose by €6 billion to €372.7 billion.

The Central Bank pointed out that €2.5 billion of the increase was accounted for by lending to "non-bank IFSC companies" which is generally not related to activity in the domestic economy.

The rate of increase in residential mortgages fell to 14.2 per cent, from 15.1 per cent in October, continuing the trend of approximately one percentage point fall a month since January 2007. It is the 16th consecutive month in which growth in residential mortgage lending declined. Outstanding residential mortgages increased by €1.3 billion in November to €138.5 billion.

Dr Ronnie O'Toole, chief economist with National Irish Bank, said the figures reflected the ongoing weakness in the housing sector. These figures are the last monthly figures before the 2008 Budget reforms were announced and will be the baseline against which any change in the residential market will be judged," said Dr O'Toole. "Applications for planning permissions have strengthened since Easter, indicating a long-term confidence in the market."

The figures are net flows and they do not reflect mortgage switching activity as consumers chase lower rates, he added.

He said mortgage switching now accounts for 17.4 per cent of the volume of mortgage lending.

The growth in non-mortgage lending also slowed in November to 21.6 per cent from 23.4 per cent the previous month.

New spending on credit cards was €28 million lower in November, but repayments also fell by €84 million. The annual rate of increase in outstanding indebtedness on credit cards continued to moderate - falling to 11.1 per cent in November from 11.5 per cent in October.

The Central Bank also noted that market interest rates rose in November across most maturities.

Tensions in the euro money market about funding over the year-end period caused a sharp move in the one-month rate at the end of November, which was 66 basis points higher than at the end of the previous month.