Bank of England study examines credit shocks in Ireland housing market
Research on Ireland's housing and rental markets shows tighter credit conditions can push house prices down while lifting rents. The study focuses on mortgage lending limits introduced in 2015 and on real interest rate shocks, highlighting potential trade-offs for macroprudential policy.
Highlights
- Bank of England study models Ireland's housing market post-2015 mortgage policy, focusing on loan-to-value and loan-to-income restrictions.
- Contractionary credit shocks reduce house prices but increase rents in both the short and long run, highlighting differing effects for owners and renters.
- Findings suggest tighter credit rules shift market pressure to rental segments, though study lacks a full cost-benefit analysis including financial sector risk cycles.
Ireland case study on credit conditions
As reported by the Bank of England, the study builds a model in which house prices and rents are determined by interactions among heterogeneous renters, homeowners and landlords. It uses Ireland as a case study to assess changes in credit conditions linked to mortgage policies introduced in 2015 that limit loan-to-value and loan-to-income ratios on newly originated mortgages, as well as real interest rate shocks.The paper finds that contractionary credit shocks reduce house prices on impact. At the same time, they increase rents in both the short run and the long run, pointing to different effects across the owner-occupied and rental segments of the market.
Policy implications for rental markets
The findings add to the broader assessment of macroprudential policy tools by identifying effects on rental-market margins that may be overlooked when the focus is only on house prices or mortgage borrowing. For policymakers, that suggests tighter credit rules can shift pressure toward tenants even as they restrain price growth in housing purchases.The study also sets limits on its conclusions. It does not provide a fully integrated assessment of the costs and benefits of these policies because it does not model the cyclical build-up of risks in the financial sector.
In our earlier coverage of Europe’s uneven growth outlook and its impact on credit conditions, we noted that improving prospects in Germany, the UK, and Spain contrasted with continued weakness in France. We also highlighted how persistent inflation risks, tight fiscal constraints, and competitiveness gaps can influence borrowing conditions and market sentiment across the region.
Latest Rental Market News
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
