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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)

  • McQuinn, Kieran

    (Central Bank and Financial Services Authority of Ireland)

  • O' Reilly, Gerard

    (Central Bank and Financial Services Authority of Ireland)

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 ofmuch 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

Paper provided by Central Bank of Ireland in its series Research Technical Papers with number 9/RT/09.

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Length: 31 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:cbi:wpaper:9/rt/09

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References

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Citations

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Cited by:
  1. Kennedy, Gerard & McQuinn, Kieran, 2011. "Scenarios for Irish House Prices," Economic Letters 02/EL/11, Central Bank of Ireland.
  2. Robert Kelly & Kieran Mcquinn & Rebecca Stuart, 2011. "Exploring the Steady-State Relationship Between Credit and GDP for a Small Open Economy–The Case Of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 42(4), pages 455–477.
  3. Kennedy, Gerard & McQuinn, Kieran, 2012. "Why are Irish house prices still falling?," Economic Letters 05/EL/12, Central Bank of Ireland.
  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. 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.
  6. 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).
  7. Gregory Connor & Thomas Flavin & Brian O’Kelly, 2010. "The U.S. and Irish Credit Crises: Their Distinctive Differences and Common Features," Economics, Finance and Accounting Department Working Paper Series n206-10.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  8. Duffy, David, 2009. "Negative Equity in the Irish Housing Market," Papers WP319, Economic and Social Research Institute (ESRI).
  9. 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.
  10. Sa, Filipa & Towbin, Pascal & wieladek, tomasz, 2011. "Low interest rates and housing booms: the role of capital inflows, monetary policy and financial innovation," Bank of England working papers 411, Bank of England.
  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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