Macroprudential easing and mortgage borrower outcomes: Evidence from Ireland

Anuj Pratap Singh and Fang Yao
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Anuj Pratap Singh: Central Bank of Ireland
Fang Yao: Central Bank of Ireland

No 13/RT/25, Research Technical Papers from Central Bank of Ireland

Abstract: We examine key borrower level outcomes transmitted through Ireland’s 2023 recalibration of the loan-to-income (LTI) limit for first-time buyers (FTBs), which increased the cap from 3.5 to 4. Employing identifying assumptions and propensity score matching on granular mortgage data, we compare the exposed FTBs (the treatment group) and second/subsequent buyers (SSBs, the control group) using a difference-in-differences design. Our findings show that the LTI easing led to an increase in credit for borrowers who were likely most affected by the limit, but this additional credit was used differently in Greater Dublin Area versus the Rest of the Country. Moreover, the LTI allowances (lending above the LTI limit) played an important role in facilitating access for lower-income borrowers before the easing, and we provide evidence that in the new framework, these borrowers are being facilitated credit as a result of the higher LTI limit, in line with the intended policy outcome.

Keywords: Macroprudential measures; LTI; LTV; mortgage; house price; leverage; borrower liquidity. (search for similar items in EconPapers)
JEL-codes: G21 G28 G51 (search for similar items in EconPapers)
Date: 2025-09
New Economics Papers: this item is included in nep-cba
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