Non-bank mortgage lending in Ireland: recent developments and macroprudential considerations

Edward Gaffney, Christina Hennessy and Feargal McCann
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Edward Gaffney: Central Bank of Ireland
Christina Hennessy: Central Bank of Ireland
Feargal McCann: Central Bank of Ireland

No 3/FS/22, Financial Stability Notes from Central Bank of Ireland

Abstract: In this Note, we outline the growing role that non-bank lenders are playing in the Irish mortgage market. We show that market share of new lending has increased from 3 per cent in 2018 to 13 per cent in 2021. Non-bank lending is currently concentrated in the buy-to-let and refinance segments of the market, when compared to lending by retail banks. On loan pricing, we show that non-banks had higher interest rates in 2018, but have reduced rates to the point where average interest rates were lower than retail banks in 2021. Among home buyers, customers of non-banks and retail banks have similar characteristics, with the exception that non-bank customers access mortgage finance almost uniquely through mortgage brokers. We complement the data with a discussion of the economic benefits that non-bank lending can bring, as well as sources of potential financial stability risks.

Date: 2022-05
New Economics Papers: this item is included in nep-cba, nep-mon and nep-ure
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Citations: View citations in EconPapers (3)

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