Economic Letter: A review of residential mortgage lending in 2016

25 May 2017 Press Release

Houses in a row

  • 29,893 new mortgage loans to value of €5.7 billion issued in 2016;
  • First-Time-Buyers borrowed an average of 78.8 per cent of property value and 2.9 times income. Second and Subsequent Buyers borrowed an average of 66.4 per cent of property value and 2.4 times income. This was broadly similar to 2015.
  • The characteristics of borrowers with either an LTV or an LTI exemption were also similar to 2015.

The Central Bank of Ireland has published a new Economic Letter by Christina Kinghan, Paul Lyons, Yvonne McCarthy and Conor O'Toole. The Letter provides a detailed overview of residential mortgage lending in Ireland in 2016.

The research examines mortgage lending in the context of the residential mortgage measures. The measures were first introduced by the Central Bank in 2015 in line with its role as the Macroprudential Authority in Ireland. The objective of the measures is to enhance the resilience of households and banks to future shocks and to limit pro-cyclical dynamics between credit and house prices. The regulations apply loan-to-value (LTV) and loan-to-income (LTI) limits to mortgage lending, while allowing for a certain percentage of lending in excess of the limits.

The Letter uses loan-by-loan information collected by the Central Bank to monitor compliance with the LTV and LTI limits. The data in the Letter are compiled from lenders who advanced at least €50m of residential mortgage loans in a six-month period in 2016, and includes Allied Irish Bank, Bank of Ireland, Permanent TSB, Ulster Bank Ireland and KBC Bank Ireland.

The Letter examines mortgage lending covered by the regulations (in-scope) and lending which was exempt from the regulations. The research finds:

  • The average LTV and LTI for both First-Time-Buyers and Second and Subsequent Buyers were similar to those observed in 2015.
  • 12 per cent of the value of new Principal Dwelling House lending at the five institutions exceeded the LTV limit (up to 15 per cent per institution is permitted over the entire year), with 13 per cent exceeding the LTI cap (up to 20 per cent per institution is permitted over the entire year). Under the measures, a proportion of lending is permitted at levels above the specified limits in recognition that higher LTV and LTI mortgages can be appropriate in certain circumstances.
  • The average loan drawn down by First-Time-Buyers in scope of the regulations was €185,939, with an average property price of €250,361 and average income of €67,287. For Second and Subsequent Buyers the average loan drawn down and in scope of the regulations was €217,602, with an average property price of €390,933 and an average income of €106,421.
  • The largest share of First-Time- Buyers in 2016 were single borrowers (approximately 56 per cent), while over a third of First-Time-Buyers bought properties in Dublin. Almost 90 per cent of First- Time-Buyers were employees.


  • Following a review of the mortgage market measures conducted in 2016, a number of changes to the Regulations were announced and became effective on 01 January 2017. The data in this Letter precede these changes, and refer only to lending in 2016.
  • The views expressed in this paper are those of the authors only and do not necessarily reflect the views of the Central Bank of Ireland.