In July last year, the Croatian National Bank set clear limits on consumer borrowing with the aim of reducing risks stemming from excessive borrowing. Senior Advisor Krunoslav Zauder from Macroprudential Policy Department discusses the effects of macroprudential measures and their possible adjustments.
Sections:
00:49
The measures we have introduced are of a preventive nature, introduced in good times to avoid more severe problems in “bad” times.
06:08
Macroprudential restrictions on lending criteria are measures introduced by the CNB restricting the ratio of monthly debt service to consumer income to a maximum of 45% for housing loans and 40% for non-housing loans, while for all loans collateralised by real estate the ratio of the total loan amount to the value of the real estate serving as collateral may not exceed 90%.
07:40
In the first eight months of application, there have been visible effects on credit activity, the degree of riskiness and the change in the distribution of newly-granted loans.
11:43
Housing affordability is a broader topic. From the perspective of financial stability, the focus is on the sustainability of loans, not on real estate prices. A housing loan is a large long-term financial obligation and it is therefore crucial that loans are sound and sustainable for the borrower, but also for the system.
16:12
The measures should be seen as a whole, they are complementary. In order for the system to remain stable in times of crisis, banks must also have sufficient capital. Capital buffers should make it easier for banks to withstand losses in bad times and to continue lending under such conditions.
18:45
The CNB will not lift the measures because they are structural in nature. The function of such measures is to ensure that lending criteria do not become too lenient and loans too risky.