Credit conditions in a boom and bust property market

Yvonne McCarthy and Kieran McQuinn

No 08/RT/13, Research Technical Papers from Central Bank of Ireland

Abstract: The interrelationship between house prices and mortgage credit has been one of the more compelling issues to warrant attention after the recent financial crisis. Considerable financial innovation and liberalisation of wholesale international funding markets over the past 20 years greatly increased the ability of banking sectors to extend credit to the real economy. Almost inevitably many countries experienced significant house price booms over this period. The rate of house price appreciation in Ireland outstripped that of most in the OECD. Availing of two new related databases of Irish mortgaged households, this paper, firstly, quantifies the respective contribution to house price movements of changing credit conditions and, secondly, estimates an index of mortgage credit availability in the Irish property market, (MMCI), over the period 2000 - 2010.

Keywords: Credit; House Prices; Income; Interest Rates; Macro prudential. (search for similar items in EconPapers)
JEL-codes: E31 R32 R38 (search for similar items in EconPapers)
Date: 2013-10
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Citations: View citations in EconPapers (26)

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