Central Bank of Ireland: Financial Stability Notes

The Central Bank of Ireland has today published its first Financial Stability Note. This new series will cover financial stability related topics including those relating to risks and vulnerabilities facing the Irish and European financial system.


The Note, ‘Macroprudential Measures and Irish Mortgage Lending: An Overview of 2017’, by Christina Kinghan, Paul Lyons and Elena Mazza, provides an overview of new residential mortgage lending in Ireland in 2017. It describes key loan and borrower characteristics of loans subject to the Central Bank’s Mortgage Measures along with a comparison to lending in 2016. The Note also provides details on loans with an allowance to exceed the loan-to-value (LTV) and loan-to-income (LTI) limits, as permitted under the Measures. 35, 472 new loans are examined, with a value of €7.4 billion.


The key findings of today’s Financial Stability Note are:


  • First-time-buyers (FTBs) in 2017 had an average LTV of 79.8% and an average LTI of 3 times gross income. This represents a marginal increase on the average LTV and LTI ratios reported in 2016. FTBs also had a larger loan size, property value and income compared to FTBs one year earlier (see Table 4).
  • The average loan size and property value of second and subsequent buyers (SSBs) also increased compared to 2016. The average LTV for SSBs in 2017 was 67.6% and the average LTI was 2.6 times gross income (see Table 5).
  • A higher proportion of loans for both FTBs and SSBs were originated on a fixed interest rate compared with one year earlier.
  • 17% of the aggregate value of SSB lending exceeded the SSB LTV limit.
  • 18% of new primary dwelling home (PDH) lending exceeded the 3.5 LTI cap. This corresponds to 25% of the value of FTB lending and 10% of the value of SSB lending. A larger share of LTI allowances was accounted for by FTBs (74%) relative to SSBs (26%).
  • Allowances to exceed the LTI and LTV caps were allocated to borrowers in all four quarters of 2017 (see Table 7).