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Irish mortgage market up 15 pct, further growth seen in 2017

DUBLIN, Feb 2 (Reuters) - Irish mortgage lending grew by 15 percent in 2016, data showed on Thursday, and analysts expect the recovering economy to spur further growth this year, returning the market to more normal levels.

Mortgage lending in Ireland (Other OTC: IRLD - news) collapsed in the wake of the 2007/09 global financial crisis following a banking and economic crash. Its recovery over the last three years has been held back by a severe shortage of housing and tighter lending rules.

Drawdowns rose to 5.7 billion euros last year, from 4.9 billion euros in 2015, data from the Irish Banking And Payments Federation showed. That included a 26 percent year-on-year jump in the fourth quarter when the government introduced a new subsidy for first-time buyers and the central bank eased lending caps.

"Today's data shows that the mortgage market in Ireland is seeing continued strong growth as the household deleveraging phase comes to an end," Goodbody Stockbrokers' analyst Susie Crawford said in a note.

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"We see a bumper year ahead with a robust labour market and looser macro prudential rules contributing to increasing house prices," she said, forecasting gross mortgage lending of 7 billion euros in 2017.

Analysts estimate that annual mortgage lending of around 10 billion euros would represent a normal market for Ireland's population of 4.76 million. Irish banks were lending as much as 40 billion euros a year at the height of the runaway "Celtic Tiger" economy.

The economy has recovered to be the best performing in the European Union for the last three years and that momentum should help deliver 20 percent growth in new mortgage lending this year, said Davy Stockbrokers' economist David McNamara.

However, he said a key determining factor will be whether construction can ramp up from current low levels. Annual housebuilding will have to almost double to 25,000 units if the mortgage market is to reach 10 billion euros by 2020, he said. (Reporting by Padraic Halpin; Editing by Susan Fenton)