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Credit conditions in a boom and bust property market

  • McCarthy, Yvonne

    (Central Bank of Ireland)

  • McQuinn, Kieran

    (Central Bank of Ireland)

The interrelationship between house prices and mortgage credit has been one of the more compelling issues to warrant attention after the recent financial crisis. Considerable financial innovation and liberalisation of wholesale international funding markets over the past 20 years greatly increased the ability of banking sectors to extend credit to the real economy. Almost inevitably many countries experienced significant house price booms over this period. The rate of house price appreciation in Ireland outstripped that of most in the OECD. Availing of two new related databases of Irish mortgaged households, this paper, firstly, quantifies the respective contribution to house price movements of changing credit conditions and, secondly, estimates an index of mortgage credit availability in the Irish property market, (MMCI), over the period 2000 - 2010.

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Paper provided by Central Bank of Ireland in its series Research Technical Papers with number 08/RT/13.

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Date of creation: Oct 2013
Date of revision:
Handle: RePEc:cbi:wpaper:08/rt/13
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  1. Stefan Gerlach & Wensheng Peng, 2003. "Bank Lending and Property Prices in Hong Kong," Working Papers 122003, Hong Kong Institute for Monetary Research.
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  4. Kelly, Robert & McCarthy, Yvonne & McQuinn, Kieran, 2012. "Impairment and negative equity in the Irish mortgage market," Journal of Housing Economics, Elsevier, vol. 21(3), pages 256-268.
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  8. Kennedy, Gerard & McIndoe Calder, Tara, 2011. "The Irish Mortgage Market: Stylised Facts, Negative Equity and Arrears," Research Technical Papers 12/RT/11, Central Bank of Ireland.
  9. Addison-Smyth, Diarmaid & McQuinn, Kieran & O'Reilly, Gerard, 2009. "Modelling Credit in the Irish Mortgage Market," The Economic and Social Review, Economic and Social Studies, vol. 40(4), pages 371-392.
  10. Ben S. Bernanke & Ilian Mihov, 1998. "Measuring Monetary Policy," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 869-902, August.
  11. John V. Duca & John Muellbauer & Anthony Murphy, 2010. "Housing markets and the financial crisis of 2007-2009: lessons for the future," LSE Research Online Documents on Economics 33613, London School of Economics and Political Science, LSE Library.
  12. Trevor Fitzpatrick & Kieran Mcquinn, 2007. "House Prices And Mortgage Credit: Empirical Evidence For Ireland," Manchester School, University of Manchester, vol. 75(1), pages 82-103, 01.
  13. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
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