New figures from the Central Bank show that loans to households decreased by 3.1% in August compared with to the same time last year.
The Central Bank said that mortgage loans, which account for 83% of household loans, fell by €159m in August.
In year-on-year terms, mortgage loans declined by 1.9%, with households repaying €1.4 billion more than was advanced in new loans.
Today's figures also show that non-housing loans increased by €41m last month.
The Central Bank noted that growth in credit card spending during the month was mainly driven by education expenditure, while non-housing loans for consumer and other purposes declined by 1.4%.
Meanwhile, deposits from households declined by €519m in August, reversing the net increase in household deposits recorded in the previous month.
On an annual basis, household deposits increased by €2.3 billion or 2.4% in August
The Central Bank said that banks now hold €7 billion more household deposits than loans. This compares to 2009 where household loans exceeded deposits by €53.5 billion.
Commenting on today's figures from the Central Bank, Merrion economist Alan McQuaid that although encouraging in some aspects, the overall banking data are still a cause for concern.
He said the fact that households and businesses appear to want to pay down out-standing debt is "fine".
But he noted that as the cost of funding remains high, particularly compared with the euro zone average, there seems to be no real incentive to take on new borrowings.
He said this is a real concern as regards boosting economic activity in the future.
