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The Irish Mortgage Market: Stylised Facts, Negative Equity and Arrears


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  • Kennedy, Gerard

    (Central Bank of Ireland)

  • McIndoe Calder, Tara

    (Central Bank of Ireland)

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    This paper uses loan-level data from the residential mortgage books of four Irish credit institutions, as at December 2010. The focus of the paper, is to provide an overview of the structure and condition of these housing loan books. This includes a description of borrower categories, interest rate profiles, repayment structures, property types, arrears accruals and the regional distributions of these loan and borrower characteristics across Ireland. Because it is possible to secure more than one loan on an individual house, we distinguish the number of properties underlying the residential mortgage book. Additionally we combine the data with house price data in order to generate estimates on the amount of housing equity in the Irish mortgage market. We focus on the properties in negative equity, in particular. Our findings suggest that approximately 31 per cent of mortgaged properties, representing over 47 per cent of the mortgage books’ outstanding loan balances were in negative equity at the end of 2010. Of the mortgaged properties in negative equity, 8 per cent had also accrued more than three months worth of arrears on their mortgage loans.

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    Bibliographic Info

    Paper provided by Central Bank of Ireland in its series Research Technical Papers with number 12/RT/11.

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    Date of creation: Nov 2011
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    Handle: RePEc:cbi:wpaper:12/rt/11

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    Keywords: Credit; Asset Pricing; Banks; Mortgages; Regional Economic Activity; Size and Spatial Distributions of Regional Economic Activity; Housing Demand; Housing Supply and Markets;

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    1. Trevor Fitzpatrick & Kieran Mcquinn, 2007. "House Prices And Mortgage Credit: Empirical Evidence For Ireland," Manchester School, University of Manchester, University of Manchester, vol. 75(1), pages 82-103, 01.
    2. Reamonn Lyndon & Yvonne McCarthy, 2013. "What Lies Beneath? Understanding Recent Trends in Irish Mortgage Arrears," The Economic and Social Review, Economic and Social Studies, Economic and Social Studies, vol. 44(1), pages 117–150.
    3. Duffy, David, 2009. "Negative Equity in the Irish Housing Market," Papers, Economic and Social Research Institute (ESRI) WP319, Economic and Social Research Institute (ESRI).
    4. Kelly, Morgan, 2007. "On the likely Extent of Falls in Irish House Prices," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), Economic and Social Research Institute (ESRI), vol. 2007(2-Summer), pages 42-54.
    5. Kelly, Robert & McCarthy, Yvonne & McQuinn, Kieran, 2012. "Impairment and negative equity in the Irish mortgage market," Journal of Housing Economics, Elsevier, Elsevier, vol. 21(3), pages 256-268.
    6. David Rae & Paul van den Noord, 2006. "Ireland's Housing Boom: What has Driven it and Have Prices Overshot?," OECD Economics Department Working Papers 492, OECD Publishing.
    7. Luci Ellis, 2008. "How many in negative equity? The role of mortgage contract characteristics," BIS Quarterly Review, Bank for International Settlements, Bank for International Settlements, December.
    8. Roche, Maurice, 2003. "Will there be a Crash in Irish House Prices?," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), Economic and Social Research Institute (ESRI), vol. 2003(4-Winter), pages 1-16.
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