FRANKFURT: Mortgage lending is a major source of difficulty for euro zone banks but macroprudential measures have so far prevented adverse developments, the head of the euro zone's banking regulator told the Slovenian Press Agency on Sunday.
Ultra low interest rates across the euro zone have increased the chance that asset bubbles will be formed and the European Central Bank has already warned that commercial real estate has become overpriced.
"A possible source of difficulties for banks are real estate mortgages," Daniele Nouy, head of the ECB's Single Supervisory Mechanism, said in an interview with the news agency. "We have so far not seen any adverse developments."
She added: "Some macroprudential measures have been taken, in the form of limiting loan-to-value and loan-to-income ratios. This is probably helping."
The ECB raised the prospect of a further rate cut on Thursday and said that rates will stay exceptionally low for an extended period as it struggles to raise inflation from close to zero.
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