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Modelling Credit in the Irish Mortgage Market

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  • Addison-Smyth, Diarmaid

    (Central Bank and Financial Services Authority of Ireland, Dublin)

  • McQuinn, Kieran

    (Central Bank and Financial Services Authority of Ireland, Dublin)

  • O'Reilly, Gerard

    (Central Bank and Financial Services Authority of Ireland, Dublin)

Abstract

The sharp decline in the performance of international property markets has been central to the financial distress experienced globally. The Irish housing market experienced particularly strong rates of price increases and heightened activity levels by OECD standards. One reason cited for such large price increases has been the significant degree of financial liberalisation experienced by Irish credit institutions. The culmination of much of this liberalisation resulted in large increases in the availability of mortgage credit. In this paper we apply a recently developed model of mortgage credit and examine the implications for Irish house prices of changes in lending patterns. Our results suggest that post 2003, a significant amount of the increase in Irish prices was determined by innovative developments in international finance, which enabled Irish institutions, in particular, to secure alternative sources of lending funds.

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Bibliographic Info

Article provided by Economic and Social Studies in its journal Economic and Social Review.

Volume (Year): 40 (2009)
Issue (Month): 4 ()
Pages: 371-392

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Handle: RePEc:eso:journl:v:40:y:2009:i:4:p:371-392

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References

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Citations

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Cited by:
  1. Yvonne McCarthy & Kieran McQuinn, 2011. "How Are Irish Households Coping with their Mortgage Repayments? Information from the Survey on Income and Living Conditions," The Economic and Social Review, Economic and Social Studies, vol. 42(1), pages 71-94.
  2. Constantin Gurdgiev & Brian M. Lucey & Ciarán Mac an Bhaird & Lorcan Roche-Kelly, 2011. "The Irish Economy: Three Strikes and You’re Out?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(1), pages 19-41, March.
  3. Duffy, David, 2009. "Negative Equity in the Irish Housing Market," Papers WP319, Economic and Social Research Institute (ESRI).
  4. Diarmaid Addison-Smyth & Kieran McQuinn, 2010. "Quantifying Revenue Windfalls from the Irish Housing Market," The Economic and Social Review, Economic and Social Studies, vol. 41(2), pages 201-233.
  5. Connor, Gregory & Flavin, Thomas & O’Kelly, Brian, 2012. "The U.S. and Irish credit crises: Their distinctive differences and common features," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 60-79.
  6. Filipa Sá & Pascal Towbin & Tomasz Wieladek, 2011. "Low interest rates and housing booms: the role of capital inflows, monetary policy and financial innovation," Globalization and Monetary Policy Institute Working Paper 79, Federal Reserve Bank of Dallas.
  7. Kennedy, Gerard & McQuinn, Kieran, 2012. "Why are Irish house prices still falling?," Economic Letters 05/EL/12, Central Bank of Ireland.
  8. Kelly, Robert & McQuinn, Kieran & Stuart, Rebecca, 2011. "Exploring the Steady-State Relationship between Credit and GDP for a Small Open Economy - The Case of Ireland," Research Technical Papers 1/RT/11, Central Bank of Ireland.
  9. Kennedy, Gerard & McQuinn, Kieran, 2011. "Scenarios for Irish House Prices," Economic Letters 02/EL/11, Central Bank of Ireland.
  10. Duffy, David & O'Hanlon, Niall, 2013. "Negative Equity in the Irish Housing Market: Estimates Using Loan Level Data," Papers WP463, Economic and Social Research Institute (ESRI).
  11. McCarthy, Yvonne & McQuinn, Kieran, 2013. "Credit conditions in a boom and bust property market," Research Technical Papers 08/RT/13, Central Bank of Ireland.

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