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The Introduction of Macroprudential Measures for the Irish Mortgage Market

Author

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  • Mark Cassidy

    (Central Bank of Ireland, Dublin, Ireland)

  • Niamh Hallissey

    (Central Bank of Ireland, Dublin, Ireland)

Abstract

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

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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. Petr Polak & Lubos Komarek, 2020. "Mortgage loan regulation instruments around the world," Occasional Publications - Chapters in Edited Volumes, in: CNB Global Economic Outlook - July 2020, pages 13-19, Czech National Bank.
    3. 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.
    4. Kelly, Jane & Mazza, Elena, 2019. "Mortgage servicing burdens and LTI caps," Financial Stability Notes 13/FS/19, 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.
    6. Martin Cesnak & Jan Klacso & Roman Vasil, 2021. "Analysis of the Impact of Borrower-Based Measures," Working and Discussion Papers OP 3/2021, Research Department, National Bank of Slovakia.
    7. 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.
    8. 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.

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