The Central Bank has said the deceleration in residential mortgage borrowing has become evident with the first half of 2007 showing a slowdown of 25 per cent compared to the same period of 2006.
In the first six months of the year, outstanding residential mortgages increased by €8.6 billion, over 25 per cent lower than the increase in the first half of 2006, according to Central Bank data for June.
The level of borrowing inclusive of securitisations rose by €1.6 billion in June, bringing total outstanding residential mortgages to €131.8 billion.
But the bank said the annual rate of increase in residential mortgages (inclusive of securitisations) continued its downward trend, declining by a percentage point to 19 per cent between May and June.
June saw a sizeable increase in private sector credit growth, according to the data. But for the considerable asset-backed securitisation of residential mortgages, private sector expansion would have come close to €7 billion in June, which would have been one of the largest ever returned.
Instead, the actual monthly increase of €5.3 billion brought the annual level of private sector credit growth to €342.8 billion, a reduction of over half a percentage point in June to 20.2 per cent for the adjusted figure.
This decline was at a slower pace than during the previous three months.
Irish demand for non-mortgage credit was described as "strong" by the Central Bank, accounting for most of the increase in private sector credit.
Despite the increase, the adjusted annual growth rate fell to 26.3 per cent in June, its lowest rate in two years.
Term/revolving loans rose by €2.7 billion over the month, the largest monthly increase in this loan category this year.
Although lending to non-financial corporates was robust during June, there was also a larger-than-usual increase in lending to other financial intermediaries. During June, the euro appreciated by 0.4 per cent against the US dollar and by 1.9 per cent against the Japanese yen but depreciated by 0.9 per cent against sterling.
Exchange rate movements resulted in a 0.4 per cent decline in Ireland's nominal harmonised competitiveness indicator from 107 in May, to 106.6 in June.