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Macroprudential Measures and Irish Mortgage Lending: A Review of Recent Data

Author

Listed:
  • Keenan, Enda

    (Central Bank of Ireland)

  • Kinghan, Christina

    (Central Bank of Ireland)

  • McCarthy, Yvonne

    (Central Bank of Ireland)

  • O'Toole, Conor

    (Central Bank of Ireland)

Abstract

Using loan-by-loan information collected by the Central Bank of Ireland to monitor compliance with the loan-to-value (LTV) and loan-to-income (LTI) macroprudential Regulations, this Economic Letter provides an overview of residential mortgage lending that took place in Ireland in 2015. We caution that these data cover a period in which the banking sector was transitioning to the new regulatory arrangement and drawing inference from one snapshot of data may be premature. A total of e4.6bn of mortgage loans was covered by these data in 2015, with 56 per cent in-scope of the measures. The average property price for first-time buyers in-scope of the measures was e234,599 at an average LTV of 78.7 per cent. For secondand subsequent borrowers, the average property price was e374,644 with an average LTV of 65.8 per cent. Comparing in-scope and out-of-scope lending for 2015, we find that average LTVs and LTIs for principal dwelling house (PDH) lending were marginally lower in-scope. Under the Irish Regulations, a proportion of lending is permitted at levels of LTV and LTI above the limits. A total of 13 per cent of in-scope PDH lending exceeded the LTV cap and 17 per cent of in-scope PDH lending exceeded the LTI cap. We observe differences in the characteristics of borrowers with and without an allowance. Notably, differences were evident across income, borrower age, marital status and region.

Suggested Citation

  • Keenan, Enda & Kinghan, Christina & McCarthy, Yvonne & O'Toole, Conor, 2016. "Macroprudential Measures and Irish Mortgage Lending: A Review of Recent Data," Economic Letters 03/EL/16, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:03/el/16
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    References listed on IDEAS

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    1. Kelly, Robert & O'Malley, Terence & O'Toole, Conor, 2015. "Designing Macro-prudential Policy in Mortgage Lending: Do First Time Buyers Default Less?," Research Technical Papers 02/RT/15, Central Bank of Ireland.
    2. Kelly, Robert & O'Toole, Conor, 2016. "Lending Conditions and Loan Default: What Can We Learn From UK Buy-to-Let Loans?," Research Technical Papers 04/RT/16, Central Bank of Ireland.
    3. Hallissey, Niamh & Kelly, Robert & O'Malley, Terry, 2014. "Macro-prudential Tools and Credit Risk of Property Lending at Irish banks," Economic Letters 10/EL/14, Central Bank of Ireland.
    4. Mark Cassidy & Niamh Hallissey, 2016. "The Introduction of Macroprudential Measures for the Irish Mortgage Market," The Economic and Social Review, Economic and Social Studies, vol. 47(2), pages 271-297.
    5. Reamonn Lyndon & Yvonne McCarthy, 2013. "What Lies Beneath? Understanding Recent Trends in Irish Mortgage Arrears," The Economic and Social Review, Economic and Social Studies, vol. 44(1), pages 117-150.
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    Cited by:

    1. Conor O'Toole & Kieran McQuinn & Philip Economides, 2021. "Household savings constraints, uncertainty and macroprudential policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(2), pages 238-260, May.
    2. Lozej, Matija & Rannenberg, Ansgar, 2017. "The macroeconomic effects of the regulatory LTV and LTI ratios in the Central Bank of Ireland's DSGE model," Economic Letters 04/EL/17, Central Bank of Ireland.
    3. Kelly, Jane & Mazza, Elena, 2019. "Mortgage servicing burdens and LTI caps," Financial Stability Notes 13/FS/19, Central Bank of Ireland.
    4. Kinghan, Christina, 2018. "Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2018," Financial Stability Notes 8/FS/18, Central Bank of Ireland.
    5. Kinghan, Christina, 2018. "Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2018," Financial Stability Notes 08-18, Central Bank of Ireland.
    6. Lo Duca, Marco & Hallissey, Niamh & Jurca, Pavol & Kouratzoglou, Charalampos & Lima, Diana & Pirovano, Mara & Prapiestis, Algirdas & Saldías, Martín & Tereanu, Eugen & Bartal, Mehdi & Giedraitė, Edita, 2023. "The more the merrier? Macroprudential instrument interactions and effective policy implementation," Occasional Paper Series 310, European Central Bank.
    7. Kelly, Connor & McCann, Fergal, 2016. "Rental markets, savings and the accumulation of mortgage deposits," Quarterly Bulletin Articles, Central Bank of Ireland, pages 56-70, October.
    8. Kinghan, Christina & Lyons, Paul & Mazza, Elena, 2018. "Macroprudential Measures and Irish Mortgage Lending: An Overview of 2017," Financial Stability Notes 01-18, Central Bank of Ireland.
    9. Kinghan, Christina & Lyons, Paul & McCarthy, Yvonne & O'Toole, Conor, 2016. "Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2016," Economic Letters 06/EL/16, Central Bank of Ireland.
    10. Kinghan, Christina & McCarthy, Yvonne & O'Toole, Conor, 2016. "The Effects of Macroprudential Policy on Borrower Leverage," Economic Letters 08/EL/16, Central Bank of Ireland.

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