IDEAS home Printed from https://ideas.repec.org/p/cbi/ecolet/02-el-12.html
   My bibliography  Save this paper

Variable Mortgage Rate Pricing in Ireland

Author

Listed:
  • Goggin, Jean

    (Central Bank of Ireland)

  • Holton, Sarah

    (Central Bank of Ireland)

  • Kelly, Jane

    (Central Bank of Ireland)

  • Lydon, Reamonn

    (Central Bank of Ireland)

  • McQuinn, Kieran

    (Central Bank of Ireland)

Abstract

This Letter examines movements in the interest rates charged on variable rate mortgages. The results indicate that variable rates for all lenders closely followed changes in the ECB's policy rate, short-term wholesale rates and tracker rate mortgages until the end of 2008. Thereafter, the relationship breaks down, in part due to banks' increased market funding costs. It appears that some lenders with higher mortgage arrears rates and a greater proportion of tracker rate loans on their books exhibit higher variable rates. After controlling for these additional factors, most of the divergence between banks variable rates is explained, but there are some exceptions. There is also some evidence of asymmetric adjustment in rate setting behaviour: that is, rates tend to adjust slowly when they are above the long-run predicted level but more quickly when they are below this level. This asymmetric adjustment behaviour appears to increase in the post-2008 period.

Suggested Citation

  • Goggin, Jean & Holton, Sarah & Kelly, Jane & Lydon, Reamonn & McQuinn, Kieran, 2012. "Variable Mortgage Rate Pricing in Ireland," Economic Letters 02/EL/12, Central Bank of Ireland.
  • Handle: RePEc:cbi:ecolet:02/el/12
    as

    Download full text from publisher

    File URL: https://centralbank.ie/docs/default-source/publications/economic-letters/economic-letter---vol-2012-no-2.pdf?sfvrsn=10
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jean Cassidy, 2016. "Understanding long-term mortgage arrears in Ireland: insights from macro and micro data," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Combining micro and macro data for financial stability analysis, volume 41 Bank for International Settlements.
    2. McCann, Fergal & McIndoe-Calder, 2012. "Bank Competition Through The Credit Cycle: Implications For SME Financing," Economic Letters 04/EL/12, Central Bank of Ireland.
    3. Chris Stewart & Benn Robertson & Alexandra Heath, 2013. "Trends in the Funding and Lending Behaviour of Australian Banks," RBA Research Discussion Papers rdp2013-15, Reserve Bank of Australia.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbi:ecolet:02/el/12. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fiona Farrelly). General contact details of provider: http://edirc.repec.org/data/cbigvie.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.