ESRI paper on the Central Bank mortgage limits

Brendan Burgess

Published today

An Empirical Assessment of the Macroprudential Measures in the Irish Housing and Credit Market

I caught the end of Ronan Lyons taking it apart on Morning Ireland.

Macropudential Measures in the Irish Housing and Credit Market

The Quarterly Economic Commentary includes a Research Note titled “An Empirical Assessment of the Macroprudential Measures in the Irish Housing and Credit Market”. This paper examines the impact of recent Central Bank measures, including Loan to Value (LTV) and Loan to Income (LTI) restrictions, on mortgage credit, house prices and housing supply in Ireland.

Kieran McQuinn noted “Our analysis finds that in the short run the combined effect of the LTV and LTI restrictions has been to reduce new mortgage lending by around 10 per cent. The effect on the housing market is as yet quite muted with house prices and housing supply being relatively unchanged. However, this is not surprising given the lags involved in construction.”

Dr. McQuinn continued, “The full effects of macroprudential policy are not evident until three to four years after the measures have been implemented. Our results suggest that in the longer term house prices are likely to be 3.5 per cent lower. This decline in house prices leads to lower profitability in construction, which lowers the number of housing units completed in each quarter by approximately 5 per cent.”


Registered User
Ronan Lyons really went to town on it, saying their findings lacked credibility given whats happening in the market with buy to lets.
I'll need to listen to him again to get more detail on his argument


Registered User
Ronan Lyons certainly talks sense unlike the huge number of vested interests in government circles and the media... It is quite incredible that we still think the best way to solve the housing crisis is to increase the levels of debt people have to pay.. borrowing 3 1/2 times your salary is perfectly sensible.

The government could overnight reduce TAX on construction costs,, and also enforce charges or fees on vacant properties/ unused sites.. but making housing affordable is not really what the government wants,,