TAILIEUCHUNG - Variable Mortgage Rate Pricing in Ireland

Using count data on the number of bank failures in US states during the 1960 to 2006 period, this paper endeavors to establish how far sources of economic risk (recessions, high interest rates, in ation) or di erences in solvency and branching regulation can explain some of the fragility in banking. Assuming that variables are predetermined, lagged values provide instruments to absorb potential endogeneity between the number of bank failures and economic and regulatory conditions. Results suggest that bank failures are not merely self-fullling prophecies but relate systematically to in ation as well as to policy changes in banking regulation. Furthermore, in terms of statistical and economic signicance, the distribution and. | A Banc Ceannais na hÉireann i. i Central Bank of Ireland Eurosystem Variable Mortgage Rate Pricing in Ireland Jean Goggin Sarah Holton Jane Kelly Reamonn Lydon and Kieran McQuinn Vol 2012 No. 2 Abstract This Letter examines movements in the interest rates charged on variable rate mortgages. The results indicate that variable rates for all lenders closely followed changes in the ECB s policy rate short-term wholesale rates and tracker rate mortgages until the end of 2008. Thereafter the relationship breaks down in part due to banks increased market funding costs. It appears that some lenders with higher mortgage arrears rates and a greater proportion of tracker rate loans on their books exhibit higher variable rates. After controlling for these additional factors most of the divergence between banks variable rates is explained but there are some exceptions. There is also some evidence of asymmetric adjustment in rate setting behaviour that is rates tend to adjust slowly when they are above the long-run predicted level but more quickly when they are below this level. This asymmetric adjustment behaviour appears to increase in the post-2008 period. 1 Introduction Irish mortgages can be on a fixed or variable rate with the vast majority 85 per cent on the latter. There are two types of variable rate loans those that track the ECB base rate at an agreed margin typically called trackers and those that do not. In the latter case the lender offers no specific link to an underlying market or wholesale rate and can choose to increase or decrease the rate at its discretion. In this paper when we refer to variable rate mortgages we exclude trackers. The most common variable rate product is the Standard Variable Rate or SVR . For most of the last decade lenders SVRs closely followed their tracker rates with an average difference between the two of percentage points from 2003 to 2008. However since the end of 2008 the two interest rates have diverged with the average .

• Ngân hàng - Tín dụng
• Inverse Matrix Calculation
• Database Development
• Cluster Based Method
• Evaluation
• Trucks Weighing
• Control Stations
• Control Station