Macroprudential Measures and Irish Mortgage Lending: A Review of Recent Data

Enda Keenan, Christina Kinghan, Yvonne McCarthy and Conor O'Toole
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Christina Kinghan: Central Bank of Ireland

No 03/EL/16, Economic Letters from Central Bank of Ireland

Abstract: Using loan-by-loan information collected by the Central Bank of Ireland to monitor compliance with the loan-to-value (LTV) and loan-to-income (LTI) macroprudential Regulations, this Economic Letter provides an overview of residential mortgage lending that took place in Ireland in 2015. We caution that these data cover a period in which the banking sector was transitioning to the new regulatory arrangement and drawing inference from one snapshot of data may be premature. A total of e4.6bn of mortgage loans was covered by these data in 2015, with 56 per cent in-scope of the measures. The average property price for first-time buyers in-scope of the measures was e234,599 at an average LTV of 78.7 per cent. For secondand subsequent borrowers, the average property price was e374,644 with an average LTV of 65.8 per cent. Comparing in-scope and out-of-scope lending for 2015, we find that average LTVs and LTIs for principal dwelling house (PDH) lending were marginally lower in-scope. Under the Irish Regulations, a proportion of lending is permitted at levels of LTV and LTI above the limits. A total of 13 per cent of in-scope PDH lending exceeded the LTV cap and 17 per cent of in-scope PDH lending exceeded the LTI cap. We observe differences in the characteristics of borrowers with and without an allowance. Notably, differences were evident across income, borrower age, marital status and region.

Date: 2016-07
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