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New Mortgage Lending Activity in a Comparative Context

Author

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  • Keenan, Enda

    (Central Bank of Ireland)

  • O'Brien, Martin

    (Central Bank of Ireland)

Abstract

This Letter examines the ratio of new mortgage lending to household disposable income in monitoring cyclical systemic risk related to residential real estate lending. As the flow of new lending is more responsive to changing economic conditions than the stock of credit, this indicator may be beneficial in an early-warning context.We also examine the non-cyclical or structural determinants of the ratio in a cross-country setting to find that, as at end-2017, the actual level of the ratio in Ireland had converged to its estimated structural value. As a result, near-term developments in the volume of new mortgage lending warrants careful monitoring such that higher levels of activity are not accompanied by the emergence of excessive cyclical systemic risk.

Suggested Citation

  • Keenan, Enda & O'Brien, Martin, 2018. "New Mortgage Lending Activity in a Comparative Context," Economic Letters 5/EL/18, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:5/el/18
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    File URL: https://www.centralbank.ie/docs/default-source/publications/economic-letters/vol-2018-no-5-new-mortgage-lending-activity-in-a-comparative-context-(keenan-and-o'brien).pdf?sfvrsn=6
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    Cited by:

    1. Maria Jose Doval Tedin & Violaine Faubert, 2020. "Housing Affordability in Ireland," European Economy - Economic Briefs 061, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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