New figures from the Central Bank show that Irish households drew down €240m more in new loans for consumer purposes than was repaid in the three months to the end of May.
The Central Bank said this resulted in positive annual growth last month of 0.5%, the largest increase since February 2009.
However, it added that new lending was only seen for medium-term loans, with short and long term borrowers continuing to make net repayments on their outstanding debts.
These loans usually include car loans, as well as loans for domestic appliances and holidays, while overdrafts and credit cards are also included.
Today's Central Bank figures show that, overall, loans to households fell by 3.4% in May compared to the same time last year.
Mortgage loans - which make up about 83% of total household loans - declined by €123m, or 2.2% in May. Households repaid €1.7 billion more than was advanced in new loans, the Central Bank noted.
Meanwhile, deposit flows from households decreased by €249m in May, which the Central Bank said may reflect seasonal factors.
The Central Bank also said that Irish households were net funders of the Irish banking system for the 11th consecutive month, which has not happened since the late-1990s.
Banks now hold €6.4 billion more household deposits than loans. This compares to early 2009, when household loans exceeded deposits by €53.5 billion.
Commenting on today's figures, Merrion economist Alan McQuaid said that while not all bad news, the overall banking data remain a cause for concern.
He said that while it is fine for households and businesses to still want to pay down out-standing debt, the fact that there is no incentive to take on new borrowings is a concern for the future.
He said this is due to the fact that the cost of funding remains high, particularly compared with the euro zone average.
"The bottom line is that credit will in our view need to flow at a much stronger level than currently if the Irish economy is to grow to potential over the long-run," the economist added.