Mortgage insurance in an Irish context

The Central Bank of Ireland consultation paper on macro-prudential policy for residential real estate asked whether adequately insured mortgages should be exempt from the proposed loan-to-value (LTV) limit. An exemption for insured mortgages could alleviate the liquidity constraints associated with a LTV cap, particularly for first-time buyers. However, such an exemption could also reduce the effectiveness of a LTV cap in dampening the pro-cyclicality of property lending. Mortgage insurance is used in several other countries around the world and this Economic Letter examines the structure of the market in some of these countries and considers any policy implications for the Irish market.