Pockets of Risk in European Housing Markets: Then and Now

42 Pages Posted: 8 May 2019

See all articles by Jane Kelly

Jane Kelly

Central Bank of Ireland

Julia Le Blanc

Deutsche Bundesbank

Reamonn Lydon


Date Written: May 6, 2019


Using household survey data, we document evidence of a loosening of credit standards in Euro area countries that experienced a property price boom-and-bust cycle. Borrowers in these countries exhibited significantly higher loan-to-value (LTV) and loan-to-income (LTI) ratios in the run up to the financial crisis, and an increasing tendency towards longer-term loans compared to borrowers in other countries. In recent years, despite the long period of historically low interest rates and substantial house price increases in some countries, we do not find similar credit easing as before the crisis. Instead, we find evidence of a considerable change in borrower characteristics since 2010: new borrowers are older and have higher incomes than before the crisis.

Keywords: survey data, macroprudential policy, financial crisis, financial regulation, financial stability

JEL Classification: E5, G01, G17, G28, R39

Suggested Citation

Kelly, Jane and Le Blanc, Julia and Lydon, Reamonn P, Pockets of Risk in European Housing Markets: Then and Now (May 6, 2019). ECB Working Paper No. 2277 (2019); ISBN 978-92-899-3539-5 . Available at SSRN: https://ssrn.com/abstract=3383914

Jane Kelly

Central Bank of Ireland

P.O. Box 559
Dame Street
Dublin, 2

Julia Le Blanc (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431

Reamonn P Lydon

Independent ( email )

No Address Available

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