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The Introduction of Macroprudential Measures for the Irish Mortgage Market


  • Mark Cassidy

    (Central Bank of Ireland, Dublin, Ireland)

  • Niamh Hallissey

    (Central Bank of Ireland, Dublin, Ireland)


In February 2015 the Central Bank of Ireland introduced macroprudential measures for the Irish mortgage market in the form of limits on new lending at high loan-to-value and loan-toincome ratios. The objectives of the measures are to enhance resilience of banks and households to financial shocks and to curb cyclical tendencies in the mortgage market. The timing of the introduction of the measures was carefully considered and reflected emerging imbalances in the market as well as existing vulnerabilities in the household and banking sectors. While similar measures have been introduced in other jurisdictions, the design and application of the measures differ across countries. Some specific aspects of the design of the Irish measures include differentiated treatment for first-time buyers, buy-to-let borrowers and homeowners in negative equity. This paper discusses the rationale for the introduction of the measures as well as issues relating to their design and implementation.

Suggested Citation

  • 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.
  • Handle: RePEc:eso:journl:v:47:y:2016:i:2:p:271-297

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    References listed on IDEAS

    1. Kuttner, Kenneth N. & Shim, Ilhyock, 2016. "Can non-interest rate policies stabilize housing markets? Evidence from a panel of 57 economies," Journal of Financial Stability, Elsevier, vol. 26(C), pages 31-44.
    2. Coates, Dermot & Lydon, Reamonn & McCarthy, Yvonne, 2015. "House price volatility: The role of different buyer types," Economic Letters 02/EL/15, Central Bank of Ireland.
    3. McCarthy, Yvonne & McQuinn, Kieran, 2013. "Credit conditions in a boom and bust property market," Research Technical Papers 08/RT/13, Central Bank of Ireland.
    4. Kelly, Robert & O’Malley, Terence, 2016. "The good, the bad and the impaired: A credit risk model of the Irish mortgage market," Journal of Financial Stability, Elsevier, vol. 22(C), pages 1-9.
    5. Hallissey, Niamh, 2015. "Mortgage insurance in an Irish context," Economic Letters 05/EL/15, Central Bank of Ireland.
    6. Grace, Therese & Hallissey, Niamh & Woods, Maria, 2015. "The Instruments of Macro-Prudential Policy," Quarterly Bulletin Articles, Central Bank of Ireland, pages 90-105, January.
    7. Deniz O Igan & Heedon Kang, 2011. "Do Loan-To-Value and Debt-To-Income Limits Work? Evidence From Korea," IMF Working Papers 11/297, International Monetary Fund.
    8. Janko Cizel & Jon Frost & Aerdt G. F. J. Houben & Peter Wierts, 2016. "Effective Macroprudential Policy; Cross-Sector Substitution from Price and Quantity Measures," IMF Working Papers 16/94, International Monetary Fund.
    9. John V. Duca & John Muellbauer & Anthony Murphy, 2011. "House Prices and Credit Constraints: Making Sense of the US Experience," Economic Journal, Royal Economic Society, vol. 121(552), pages 533-551, May.
    10. Kennedy, Gerard & Stuart, Rebecca, 2015. "Macro-prudential measures and the housing market," Economic Letters 04/EL/15, Central Bank of Ireland.
    11. Luis I. Jacome H. & Srobona Mitra, 2015. "LTV and DTI Limits—Going Granular," IMF Working Papers 15/154, International Monetary Fund.
    12. Kelly, Robert & O'Malley, Terence & O'Toole, Conor, 2015. "Designing Macro-prudential Policy in Mortgage Lending: Do First Time Buyers Default Less?," Research Technical Papers 02/RT/15, Central Bank of Ireland.
    13. Reamonn Lyndon & Yvonne McCarthy, 2013. "What Lies Beneath? Understanding Recent Trends in Irish Mortgage Arrears," The Economic and Social Review, Economic and Social Studies, vol. 44(1), pages 117-150.
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    Cited by:

    1. Kelly, Robert & McCann, Fergal & O’Toole, Conor, 2018. "Credit conditions, macroprudential policy and house prices," Journal of Housing Economics, Elsevier, vol. 41(C), pages 153-167.
    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. 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.
    4. 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.
    5. McCann, Fergal & Ryan, Ellen, 2016. "Originating Loan to Value ratios and the resilience of mortgage portfolios," Economic Letters 10/EL/16, Central Bank of Ireland.

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    mortgages; macroprudential measures; Ireland;


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