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Non-bank mortgage lending in Ireland: recent developments and macroprudential considerations

Author

Listed:
  • Gaffney, Edward

    (Central Bank of Ireland)

  • Hennessy, Christina

    (Central Bank of Ireland)

  • McCann, Feargal

    (Central Bank of Ireland)

Abstract

In this Note, we outline the growing role that non-bank lenders are playing in the Irish mortgage market. We show that market share of new lending has increased from 3 per cent in 2018 to 13 per cent in 2021. Non-bank lending is currently concentrated in the buy-to-let and refinance segments of the market, when compared to lending by retail banks. On loan pricing, we show that non-banks had higher interest rates in 2018, but have reduced rates to the point where average interest rates were lower than retail banks in 2021. Among home buyers, customers of non-banks and retail banks have similar characteristics, with the exception that non-bank customers access mortgage finance almost uniquely through mortgage brokers. We complement the data with a discussion of the economic benefits that non-bank lending can bring, as well as sources of potential financial stability risks.

Suggested Citation

  • Gaffney, Edward & Hennessy, Christina & McCann, Feargal, 2022. "Non-bank mortgage lending in Ireland: recent developments and macroprudential considerations," Financial Stability Notes 3/FS/22, Central Bank of Ireland.
    • Handle: RePEc:cbi:fsnote:3/fs/22
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    File URL: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/non-bank-mortgage-lending-in-ireland-recent-developments-and-macroprudential-considerations.pdf?sfvrsn=f0ab911d_8
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    References listed on IDEAS

    as
    1. Iñaki Aldasoro & Sebastian Doerr & Haonan Zhou, 2022. "Non-bank lenders in the syndicated loan market," BIS Quarterly Review, Bank for International Settlements, March.
    2. Cima, Simone & Killeen, Neill & Madouros, Vasileios, 2019. "Mapping market-based finance in Ireland," Financial Stability Notes 17/FS/19, Central Bank of Ireland.
    3. Sirio Aramonte & Andreas Schrimpf & Hyun Song Shin, 2023. "Non-bank financial intermediaries and financial stability," Chapters, in: Refet S. Gürkaynak & Jonathan H. Wright (ed.), Research Handbook of Financial Markets, chapter 7, pages 147-170, Edward Elgar Publishing.
    4. Brett Barkley & Mark Schweitzer, 2021. "The Rise of Fintech Lending to Small Businesses: Businesses' Perspectives on Borrowing," International Journal of Central Banking, International Journal of Central Banking, vol. 17(1), pages 35-65, March.
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    Cited by:

    1. Goncharenko, Roman & Lukamanova, Elizaveta, 2025. "Monetary Policy Pass-Through to Lending Rates: Evidence from the Irish Central Credit Register," Economic Letters 1/EL/25, Central Bank of Ireland.
    2. Gaffney, Edward & McCann, Fergal, 2024. "Mortgage refinancing – from whom to whom?," Financial Stability Notes 5/FS/24, Central Bank of Ireland.
    3. Gaffney, Edward & McGeever, Niall, 2022. "The SME-lender relationship network in Ireland," Financial Stability Notes 14/FS/22, Central Bank of Ireland.
    4. Egan, Paul & Kenny, Eoin & McQuinn, Kieran, 2022. "Increasing future housing supply: What are the implications for the Irish economy," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).

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