Assessing the impact of macroprudential measures

Mary Cussen, Martin O'Brien (), Luca Onorante and Gerard O'Reilly

No 03/EL/15, Economic Letters from Central Bank of Ireland

Abstract: This Letter attempts to assess the potential impact of implementing the recently proposed proportionate loan-to-value ratio on the wider housing market. Using a dual micro and macro simulation strategy, we find evidence for some moderate negative impacts of the LTV cap on house prices and mortgage interest rates, with a proportionately larger impact on housing supply. These can, however, be considered to be close to the maximum possible impacts given the conservative assumptions and empirical strategies underlying our analysis.

Date: 2015-01
New Economics Papers: this item is included in nep-ban and nep-cba
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