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Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2016

Author

Listed:
  • Kinghan, Christina

    (Central Bank of Ireland)

  • Lyons, Paul

    (Central Bank of Ireland)

  • McCarthy, Yvonne

    (Central Bank of Ireland)

  • O'Toole, Conor

    (Central Bank of Ireland)

Abstract
This Economic Letter provides an overview of residential mortgage lending that took place in Ireland from the 1st of January to the 30th of June 2016. A total of €2.3bn of mortgage loans was covered by the data for the five main mortgage providers in the Irish market in the first half of 2016, with 93 per cent in-scope of the measures. With the exception of loan and property sizes, which were both higher in H1 2016, the characteristics of in-scope lending were broadly similar to those observed in 2015 for both FTBs and SSBs. The average LTV for in-scope FTBs in H1 2016 was 78.6 per cent while the average LTI was 2.9. Among SSBs, the average LTV and LTI were 66.2 per cent and 2.4 respectively. Regarding lending in excess of the limits of the Regulations, at end-June 2016, 11 per cent of the value of new PDH lending exceeded the LTV cap, while 12 per cent exceeded the LTI Cap. SSBs accounted for a larger share of the value of lending above the LTV limit (63 per cent against the remaining 37 per cent accounted for by FTBs) while FTBs accounted for a larger share of the value of lending that exceeded the LTI limits (72 per cent against 28 per cent for SSBs). Among both FTBs and SSBs with an allowance to exceed the LTV cap, we find a higher share of couples, a larger share of Dublin-based borrowers, a higher average income and a larger average loan size relative to the group without an LTV allowance. Regarding the LTI allowance, we find a larger share of Dublin-based and single borrowers among the group with an allowance. The average borrower with an LTI allowance has had lower income, was younger took a larger loan and bought a more expensive property than those without an allowance.

Suggested Citation

  • 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.
    • Handle: RePEc:cbi:ecolet:06/el/16
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    File URL: https://centralbank.ie/docs/default-source/publications/economic-letters/economic-letter-vol-2016-no-6.pdf?sfvrsn=6
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kieran McQuinn & Teresa Monteiro & Conor O’Toole, 2021. "House Price Expectations, Labour Market Developments and the House Price to Rent Ratio: A User Cost of Capital Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 62(1), pages 25-47, January.
    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 & Lyons, Paul & Mazza, Elena, 2018. "Macroprudential Measures and Irish Mortgage Lending: An Overview of 2017," Financial Stability Notes 1/FS/18, Central Bank of Ireland.
    5. Kinghan, Christina, 2018. "Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2018," Financial Stability Notes 8/FS/18, Central Bank of Ireland.
    6. Gerth, Florian & Temnov, Grigory, 2021. "New Ways of Modeling Loan-to-Income Distributions and their Evolution in Time - A Probability Copula Approach," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 217-236.
    7. Kinghan, Christina & Lyons, Paul & McCarthy, Yvonne, 2017. "Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2017," Economic Letters 13/EL/17, Central Bank of Ireland.
    8. Kinghan, Christina, 2018. "Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2018," Financial Stability Notes 08-18, Central Bank of Ireland.
    9. 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.
    10. 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.
    11. 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.
    12. 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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