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Mortgage credit and house prices: evidence to inform macroprudential policy

Author

Listed:
  • Arigoni, Filippo

    (Central Bank of Ireland)

  • McCann, Fergal

    (Central Bank of Ireland)

  • Yao, Fang

    (Central Bank of Ireland)

Abstract

The link between mortgage credit and the housing market is central to the objectives of macroprudential policy. In this Note we describe the role that macroprudential policy plays in guarding against the emergence of an unsustainable relationship between credit and house prices, and introduce two models available to the Central Bank of Ireland to assess the likely effects of changes in the calibration of LTI or LTV limits on the aggregate house price to income ratio. Relative to a baseline projection, the recalibration of the mortgage measures for 2023 onward is estimated to increase the aggregate HPI by between 2.8 and 4 per cent over a three year horizon.

Suggested Citation

  • Arigoni, Filippo & McCann, Fergal & Yao, Fang, 2022. "Mortgage credit and house prices: evidence to inform macroprudential policy," Financial Stability Notes 11/FS/22, Central Bank of Ireland.
    • Handle: RePEc:cbi:fsnote:11/fs/22
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    References listed on IDEAS

    as
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    Cited by:

    1. Gaffney, Edward, 2022. "Loan-to-income limits and mortgage lending outcomes," Financial Stability Notes 10/FS/22, Central Bank of Ireland.

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