Household savings constraints, uncertainty and macroprudential policy

We investigate the impact of macroprudential policy on Irish households' perception of savings adequacy, with a particular focus on households intending to purchase a home. These measures tighten loan‐to‐value ratios and raise the entry cost for home purchase. We find that the measures have had...

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Bibliographic Details
Published in:Scottish journal of political economy 2021-05, Vol.68 (2), p.238-260
Main Authors: O'Toole, Conor, McQuinn, Kieran, Economides, Philip
Format: Article
Language:English
Subjects:
Constraints
Home financing
Households
macroprudential policy
Renting
Savings
Uncertainty
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Summary:We investigate the impact of macroprudential policy on Irish households' perception of savings adequacy, with a particular focus on households intending to purchase a home. These measures tighten loan‐to‐value ratios and raise the entry cost for home purchase. We find that the measures have had a significant impact on savings constraints. Indeed, constrained potential buyers, who are planning to purchase, but not presently saving to buy a home, are the group most affected as the macroprudential rules increase the downpayment size required. Heterogeneous effects across households indicate younger, private renting households, and those with relatively uncertain cash flows.
ISSN:0036-9292
1467-9485
DOI:10.1111/sjpe.12267