Increased investments in electric vehicles and home renovation for energy efficiency volumes in the sector of green personal loans, revealed in BPFI's report.
In the first quarter of 2025, Ireland witnessed a significant surge in the green personal loan market. Green loans, which are used for environmentally friendly purposes such as electric and hybrid cars, home improvements, and energy-efficient renovations, saw the biggest increase in value of any loan category.
According to data from the Banking and Payments Federation Ireland (BPFI), the value of green personal loans increased by an impressive 29.3% year-on-year, reaching €35.1 million. This marked a 26.6% increase in the number of green loans issued, with a total of 1,531 loans.
The growth in the green personal loan market can be attributed to several key factors. One of the main drivers is the increased consumer preference for green products. As more and more people choose electric and hybrid vehicles, and opt for energy-efficient home improvements, the demand for green financing options has risen accordingly.
Another significant factor is the banking sector's focus on Environmental, Social, and Governance (ESG) strategies. For instance, AIB Group plc allocated 36% of its new lending (€2.5 billion in H1 2025) towards green and transition finance. AIB reported that green mortgages accounted for 58% of its new mortgage lending, with programs offering low-cost green loans.
Government and financial institution incentives also play a crucial role. Green mortgages, which offer lower rates or discounts for energy-efficient homes or renovations, make green financing more attractive to borrowers. Additionally, environmental regulations and credit policies encourage banks to support low-carbon projects, while restricting financing for high-pollution ventures.
The growth in the green personal loan market is not limited to loans for cars and home improvements. The value of personal loans drawn down in Q1 2025 was €2.6 billion, a year-on-year growth of 24.1%. Green personal loans accounted for €35.1 million of this total, representing a significant portion of the overall borrowing.
Anthony O'Brien, BPFI's head of sector research and analysis, noted that increases were seen across all categories, but green personal loans had the highest relative jump in value and volume. The volume of green personal loans increased by 26.6% year-on-year to 1,531 in Q1 2025.
The first three months of the year also marked "a new high for overall drawdown volumes and values". The value of car loans, which includes loans for electric batteries and plug-in hybrids, also reached a record €259 million, a 25% increase from Q1 2024. This is the highest volume and value of car loans since the data series began in 2020.
Mr. O'Brien stated that there has been continued strong demand for personal loans. He also noted that the growth in electric and plug-in hybrid electric vehicles is likely contributing to the increases in car loans.
In conclusion, the green personal loan market in Ireland is expanding rapidly due to shifting consumer preferences, proactive bank ESG programs, supportive policies, and regulatory frameworks encouraging green finance and sustainable investments. This trend is expected to continue as more consumers opt for environmentally friendly financing options.
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