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Pockets of risk in European Housing Markets: then and now

Author

Listed:
  • Kelly, Jane

    (Central Bank of Ireland)

  • Le Blanc, Julia

    (Deutsche Bundesbank, Research Centre)

  • Lydon, Reamonn

    (Central Bank of Ireland)

Abstract

Using household survey data, we document evidence of a loosening of credit standards in Euro area countries that experienced a property price boom-and-bust cycle. Borrowers in these countries exhibited significantly higher loan-to-value (LTV) and loan-to-income (LTI) ratios in the run up to the financial crisis, and an increasing tendency towards longer-term loans compared to borrowers in other countries. In recent years, despite the long period of historically low interest rates and substantial house price increases in some countries, we do not find similar credit easing as before the crisis. Instead, we find evidence of a considerable change in borrower characteristics since 2010: new borrowers are older and have higher incomes than before the crisis.

Suggested Citation

  • Kelly, Jane & Le Blanc, Julia & Lydon, Reamonn, 2018. "Pockets of risk in European Housing Markets: then and now," Research Technical Papers 12/RT/18, Central Bank of Ireland.
  • Handle: RePEc:cbi:wpaper:12/rt/18
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    File URL: https://www.centralbank.ie/docs/default-source/publications/research-technical-papers/12rt18---pockets-of-risk-in-european-housing-markets-then-and-now-(kelly-le-blanc-and-lydon).pdf?sfvrsn=7
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    References listed on IDEAS

    as
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    Cited by:

    1. Orsetta Causa & Nicolas Woloszko & David Leite, 2020. "Housing, Wealth Accumulation and Wealth Distribution: Evidence and Stylized Facts," LWS Working papers 30, LIS Cross-National Data Center in Luxembourg.

    More about this item

    Keywords

    real estate markets; macroprudential policy; systemic risk; financial crises; bubbles; financial regulation; financial stability indicators.;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G01 - Financial Economics - - General - - - Financial Crises
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • R39 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other

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