- term solution for many borrowers. fortunately, the housing market as a whole is a bright spot for the economy. higher home prices are improving the balance sheets of many households, even those that may face income and employment challenges, and new construction activity is generating new job opportunities. while affordability remains an important consideration, it is encouraging that housing has performed well in response to low interest rates. mortgage regulations and access to mortgage credit however, even during this period of strong performance in the housing market, access to affordable mortgage credit remains a barrier to homeownership for some borrowers, due in part to regulatory burden. since the last financial crisis more than a decade ago, there have been a number of new mortgage regulations that added requirements for both borrowers and lenders. 1 / 2 bis central bankers'speeches while many of these requirements have contributed to a safer and more consumer - friendly mortgage market, they have also introduced significant paperwork and delays that can present roadblocks for many borrowers. these new rules have also made it more difficult and costly for small banks to originate mortgage loans, leading many community banks to scale back on home lending activity or abandon it altogether. homeownership is as important to communities as it is to individuals, and access to credit for rural and low - to - moderate income communities often depends on community banks. in many communities, especially rural communities, if the local bank has been forced out of mortgage lending due to burdensome regulation, it means little or no access to mortgage credit, preventing buyers from financing home purchases and homeowners from selling their homes. many leaders of small community banks have told me that the compliance costs for originating smaller mortgages are prohibitive, and that the staffing and training required to meet the strict requirements are extraordinary in relation to the limited number of mortgages they originate. as one state banking commissioner said to me recently, “ it doesn ’ t make a lot of sense that you can make an $ 80, 000 truck loan on two sides of a sheet of paper, but that many, many pages of paperwork are required to make a $ 40, 000 loan on a mobile home or trailer. " in fact, i have been told by community bankers that they are sometimes compelled to make loans for lower - priced home purchases that are backed by other collateral, such as a car or equipment, because of the excessive burden of complying with the many residential home mortgage regulations and time frames for such small transactions. as a result

, but also for supervisors. and we supervisors should examine, where it is possible and prudent to do so, whether we can implement targeted relief measures for small banks. regulatory proportionality is the name of the game here. it ’ s something we already apply today in some respects, such as in the distinction between standard and model approaches. nevertheless, we should urgently put more thought into how we can embed the principle of proportionality even more firmly in future. the development of a dedicated regulatory regime for smaller banks and savings banks is another conceivable option. and even if this is still far off, no topics should be off - limits to us at this stage. 3 / 6 bis central bankers'speeches 4. digitalisation - a challenge and an opportunity ladies and gentlemen, as you can see, low interest rates and new prudential standards are making life anything but easy for institutions at the moment. of course, these repercussions ripple out into the real economy as well. and if that weren ’ t enough, there has been a peculiar shadow lingering over the german banking landscape for many years, with no one really being able to tell if it will ultimately prove to be a blessing or a curse. the shadow i am referring to is digitalisation. i am aware that this topic could easily fill a whole lecture series - but i wouldn ’ t wish to impose this burden on our annual reception today. that said, there are a few key points i would like to mention. in contrast to the other challenges i ’ ve mentioned today, digitalisation is, from the perspective of credit institutions, also an opportunity, as it provides a wealth of potential for driving down costs and tapping into new sources of income. banks and savings banks must, nevertheless, always keep an eye on the risks presented by this brave new world. let ’ s look, first of all, at the possible cost savings. these can mainly be harnessed in two ways. the first is by automating processes. take, for example, lending and the scoring methods this requires. automating these processes promises to drive down staffing costs substantially. the second way of cutting costs is through virtualisation. for banks and savings banks, this could mean no longer having to produce and sell services in the same place. think of a virtual branch, for example. thanks to net - based applications, an employee in braunschweig can now advise customers across the whole of germany – and, in principle