Mortgage Repayment Affordability across the Income Distribution

Jane Kelly and Elena Mazza
Additional contact information
Elena Mazza: Central Bank of Ireland

No 15/FS/19, Financial Stability Notes from Central Bank of Ireland

Abstract: Mortgage affordability can be measured in various ways including on the basis of the monthly serviceability of the mortgage relative to income (MSTI). Using Irish micro data, we show that the resilience of borrowers has improved on this basis, especially lower income borrowers who no longer have the highest mortgage service burdens relative to net income, in contrast to the pre-crisis period.We find that higher MSTI levels are generally correlated with higher default rates, especially among lower income groups. When measuring mortgage instalments relative to residual income after reasonable living expenses, we again see a big reduction relative to 2008, with lower income borrowers exhibiting the biggest improvement in affordability.

Date: 2019-11
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://centralbank.ie/docs/default-source/publica ... -mazza).pdf?sfvrsn=4 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cbi:fsnote:15/fs/19

Access Statistics for this paper

More papers in Financial Stability Notes from Central Bank of Ireland Contact information at EDIRC.
Bibliographic data for series maintained by Fiona Farrelly ().