Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2016

Christina Kinghan, Paul Lyons, Yvonne McCarthy and Conor O'Toole
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Christina Kinghan: Central Bank of Ireland
Paul Lyons: Central Bank of Ireland

No 06/EL/16, Economic Letters from Central Bank of Ireland

Abstract: This Economic Letter provides an overview of residential mortgage lending that took place in Ireland from the 1st of January to the 30th of June 2016. A total of €2.3bn of mortgage loans was covered by the data for the five main mortgage providers in the Irish market in the first half of 2016, with 93 per cent in-scope of the measures. With the exception of loan and property sizes, which were both higher in H1 2016, the characteristics of in-scope lending were broadly similar to those observed in 2015 for both FTBs and SSBs. The average LTV for in-scope FTBs in H1 2016 was 78.6 per cent while the average LTI was 2.9. Among SSBs, the average LTV and LTI were 66.2 per cent and 2.4 respectively. Regarding lending in excess of the limits of the Regulations, at end-June 2016, 11 per cent of the value of new PDH lending exceeded the LTV cap, while 12 per cent exceeded the LTI Cap. SSBs accounted for a larger share of the value of lending above the LTV limit (63 per cent against the remaining 37 per cent accounted for by FTBs) while FTBs accounted for a larger share of the value of lending that exceeded the LTI limits (72 per cent against 28 per cent for SSBs). Among both FTBs and SSBs with an allowance to exceed the LTV cap, we find a higher share of couples, a larger share of Dublin-based borrowers, a higher average income and a larger average loan size relative to the group without an LTV allowance. Regarding the LTI allowance, we find a larger share of Dublin-based and single borrowers among the group with an allowance. The average borrower with an LTI allowance has had lower income, was younger took a larger loan and bought a more expensive property than those without an allowance.

Date: 2016-11
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