To date, this rise in house prices has not translated, on available estimates, into an overvaluation of residential real estate assets. That said, we must continue to monitor this market closely in case this risk materialises, and to analyse other facets of the conditions under which mortgages are granted that are less influenced by the collateral value. 24/29  A second relative facet is the effort that repaying the mortgage entails for agents that have incurred this debt. Once again, empirical evidence shows that loan-to-income and debt service-to-income ratios are relevant variables for determining the probability of mortgage default, although the low interest rate environment mitigates the risk. In any event, as more than half of new mortgage loans continue to be taken out at a variable rate, high loan-to-income ratios continue to be a source of possible vulnerability for households. However, in this instance too, mortgage lending standards appear to be prudent, with no evidence that they have recently eased. Third, an additional dimension that is also relevant for estimating the probability of default is the maturity of the mortgage loans granted. Longer maturities are usually related to more foreclosures. Likewise in this case, standards have become stricter following the crisis and have not eased in recent months. Empirical evidence further shows that it is the combination of some of these dimensions that may prompt disproportionate increases in the probability of loan default. These mortgages with very lax conditions in several dimensions have also become much less significant in recent years.

We will soon be setting up a dedicated unit on SupTech, to synergise and strengthen these efforts and help sharpen our supervisory practices. Cyber security And last but not least, cyber security. Cyber-attacks are a growing threat to the financial ecosystem, and FinTech could potentially accentuate this risk. As more financial services are delivered over the internet, there will be growing security and privacy concerns from cyber threats. And maybe even systemic concerns. It is not inconceivable that the next financial crisis is triggered by a cyber-attack. We need to develop the regulatory and supervisory capabilities to address these emerging threats. Cyber risk management will be the new frontier for global regulatory efforts and supervisory cooperation. The BIS has set up a taskforce to develop international guidelines on cyber-security responsibilities for banks and fund-transfer providers, with the aim of making global payments safer. More such initiatives are likely in the years ahead. Another area that will be a growing focus is information sharing. Unlike other traditional risks facing financial institutions, cyber risks are less visible and yet often afflict multiple firms at the same time given the interconnectedness of the financial sector. The sharing of timely and actionable cyber information among financial institutions is therefore key to building resilient cyber defences within the financial ecosystem. MAS has collaborated with the Financial Services Information Sharing and Analysis Centre (FSISAC) to establish an Asia Pacific (APAC) Regional Intelligence and Analysis Centre. The Centre will encourage regional sharing and analysis of cybersecurity information within the financial services sector.