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Implementing Loan-To-Value and Debt-To-Income ratios: Learning from country experiences. The case of Poland

Beata Bierut, Tomasz Chmielewski, Adam Głogowski, Sławomir Zajączkowski and Andrzej Stopczyński

No 212, NBP Working Papers from Narodowy Bank Polski, Economic Research Department

Abstract: Starting from the mid-2000s, Poland experienced a period of rapid growth in mortgage lending, with banks offering foreign-currency, high-LTV housing loans, which exposed the sector to rising credit risk and funding challenges. Later, a surge in consumer lending led to a threat of rising credit risk in this segment. These supervisory challenges were addressed through three main instruments: guidelines related to the assessment of a borrower’s creditworthiness as well as LTV and DTI limits. The regulation has been successful from both microprudential and financial stability perspectives, as it has contributed to better risk management by banks and to the reduction of FX mortgage lending.

Keywords: financial stability; macroprudential policy; loan-to-value ratios; debt-service-to -income ratios; house prices; credit growth. (search for similar items in EconPapers)
JEL-codes: E44 E58 G21 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-mac, nep-tra and nep-ure
Date: 2015
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