"The resilience built since the introduction of the mortgage measures showed its worth during the pandemic" - Deputy Governor Sharon Donnery

05 October 2021 Press Release

Sharon Donnery

  • An overarching review of the Central Bank’s mortgage measures framework is taking place this year and into 2022, to ensure the measures and their objectives remain appropriate.
  • The benefits of the mortgage measures were evident over the past year as the resilience built since their introduction helped to protect borrowers and lenders during the Covid-19 crisis.
  • Three Financial Stability Notes published today also highlight some key examples of evidence and analysis that will inform the mortgage measures framework review.

Central Bank of Ireland Deputy Governor Sharon Donnery today (5 October 2021) participated virtually in the Bank of Lithuania’s macroprudential policy conference. The Deputy Governor discussed the overall framework review of the Central Bank of Ireland’s mortgage measures and highlighted the role of evidence and analysis in the policymaking process. Ms. Donnery reflected on lessons learned during the Covid-19 pandemic and the benefits of the resilience that has been built since the introduction of the mortgage measures.

Ms. Donnery highlighted the important role the measures have played over the past seven years. The measures have two objectives: increasing the resilience of banks and borrowers to negative economic and financial shocks, and dampening the pro-cyclicality of credit and house prices so a damaging credit-house price spiral does not re-emerge. She outlined how the policies have recently contributed to meeting their objectives as the resilience built up since the introduction of the mortgage measures showed its worth during the pandemic. House prices entering the pandemic were at lower risk of a cyclical downturn than may have been the case in the absence of the mortgage measures. Counterfactual exercises suggested house prices may have been up to 25% more expensive had the measures not been introduced. In addition, borrowers with lower indebtedness levels were less likely to require the support of a payment break.

Ms. Donnery also highlighted the findings of three Financial Stability Notes published today, which illustrate the type of analysis which will inform the overall mortgage measures framework review. The cost of housing and indebtedness across European and OECD households places Irish housing costs in an international context and Ms. Donnery noted the findings of the research that “loan to income ratios across the mortgaged population are similar in Ireland to elsewhere in Europe, and have fallen more than most since 2013.” This further indicates that borrower resilience has improved since the mortgage measures were put in place. Ms. Donnery discussed the finding that the Irish house price-to-income ratio has remained close to or below the median level across developed economies in recent years but acknowledged that this also reflects the global nature of challenges to housing affordability over the last decade.

Mortgage lending in Ireland during the 2010s examines the changing profile of new mortgage borrowers over the past decade or so. Ms. Donnery highlighted the Note’s findings that new mortgage borrowers have become both older and higher-income since the mortgage measures were put in place. However, she noted that this development also reflects wider societal and economic changes around demographics, income growth, and the risk appetite of banks since the last crisis.

The macroeconomic channels of macroeconomic mortgage policies outlines the wider economic benefits and costs of macroprudential mortgage policies. Ms. Donnery noted that this paper draws upon a wide range of international research and said, “One way to describe the benefits of such policies is that they accrue to all citizens, rather than new mortgage borrowers only; operating through the reduction of both the likelihood, as well as the severity, of a recession stemming from spiralling housing-credit dynamics”. The research also highlights the importance of a policy mix that stimulates additional housing supply through reductions in construction costs, rather than increased price levels resulting from increased debt for borrowers.

Ms. Donnery concluded by noting that the overarching mortgage measures framework is currently under review. The outcome of the review is expected to be announced in 2022.


The Central Bank of Ireland’s mortgage measures are a permanent feature of the Irish mortgage and housing market. The measures set limits on the size of mortgages that consumers can borrow, through the use of loan-to-value and loan-to-income limits.

The Central Bank is committed to annually reviewing the calibration of the mortgage measures in the context of wider housing and mortgage market developments, to ensure that they continue to meet their objectives of:

  • Ensuring that banks and borrowers are resilient to adverse events;
  • Reducing the risk of another credit-fuelled house price boom.

The outcome of the 2021 review of the mortgage measures will be announced later this year.

In addition, the Central Bank is undertaking a broader review of the overall policy framework for the mortgage measures. A review of the framework will allow the Central Bank to assess the objectives of the mortgage measures themselves and ask whether they remain appropriate. This is to ensure that the mortgage measures continue to remain fit for purpose in light of changes to the financial system and economy since the measures were first introduced in 2015.

FAQ on the mortgage measures can be found here.

The full series of Financial Stability Notes can be found here.

“The cost of housing and indebtedness across European and OECD households” (Kelly, Kennedy, and Lambert, 2021)

“Mortgage lending in Ireland during the 2010s” (Gaffney and Kinghan, 2021)

“The macroeconomic channels of macroeconomic mortgage policies” (Aikman etal., 2021)