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Waqas, Muhammad (2025) Effect of Interest Rate Changes on Consumer Borrowing Behaviour in Ireland. Masters thesis, Dublin, National College of Ireland.
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Abstract
This study investigates the effects of interest rate changes on consumer borrowing behaviour in Ireland, focusing on credit demand, refinancing activity, macroeconomic determinants of interest rates, and the institutional role of the Central Bank of Ireland. Using thematic analysis supported by existing literature, the research confirms a clear negative relationship between interest rate hikes and credit demand. Higher interest rates increase borrowing costs, reduce affordability, and encourage consumers to delay new credit applications or shift toward refinancing as a risk management strategy.
The findings reveal that refinancing activity rises during periods of interest rate volatility, with many borrowers opting for fixed-rate agreements to stabilise repayment obligations. However, access to refinancing benefits is uneven, as lower-income households and those with smaller loans face significant barriers such as switching costs and administrative burdens. Participants demonstrated strong awareness of key macroeconomic factors influencing interest rates, particularly inflation, which aligns with the Central Bank of Ireland’s price stability mandate. Other significant drivers include global interest rate trends, currency stability, and international capital flows, reflecting the interconnected nature of Irish monetary policy within global financial markets.
The study also clarifies the dual governance role of Central Bank of Ireland under the Eurozone model: even though the European Central Bank dictates the macro-monetary policy, the national central bank implements these policies domestically, safeguards financial stability, and ensures consumer protection.
Overall, the research highlights that borrowing behaviour in Ireland is shaped by both current and expected interest rate changes, with long-term credit products being more sensitive to rate fluctuations. This discovery has implications for policy makers and financial institutions in designing strategies that promote credit market stability, support vulnerable borrowers, and balance inflation control with sustainable economic growth.
| Item Type: | Thesis (Masters) |
|---|---|
| Supervisors: | Name Email Kelly, Peter UNSPECIFIED |
| Subjects: | H Social Sciences > HG Finance H Social Sciences > HG Finance > Banking H Social Sciences > HF Commerce > Marketing > Consumer Behaviour H Social Sciences > HG Finance > Credit. Debt. Loans. J Political Science > JN Political institutions (Europe) > Ireland |
| Divisions: | School of Business (- 2025) > Master of Science in Entrepreneurship |
| Depositing User: | Ciara O'Brien |
| Date Deposited: | 12 Feb 2026 10:44 |
| Last Modified: | 12 Feb 2026 10:44 |
| URI: | https://norma.ncirl.ie/id/eprint/9133 |
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