regional, still today euro area housing markets and housing finance are still structurally heterogeneous. there is considerable heterogeneity, for example, in loan characteristics, such as typical interest rate fixation periods, maturities, amortisation requirements and loan - to - value ratios ( slide 4 ). the housing market cycles are also quite country - specific. however, the latest financial crisis hit all markets by and large at the same time, albeit with differing force. now the recovery from the crisis has continued and is becoming more broadly based across countries ( slide 5 ). bis central bankers ’ speeches the rebound in house prices has been strong in several countries ( slide 6 ). the european central bank ’ s estimates of potential over / undervaluation of house prices suggest that while euro area house prices are, on average, broadly in line with fundamentals, some pockets of vulnerability do exist ( slide 7 ). the recovery in house prices and lending has been supported by an improving economic outlook and more favourable financing and lending conditions ( slides 8 – 11 ). however, developments continue to diverge both at country and regional level. housing markets and finance are heterogeneous across the nordic countries, too, albeit these economies are in many other respects quite similar to each other. structural differences exist between countries with respect to lenders ’ business models, typical loan products and the level of household indebtedness ( slides 12 – 13 ). the four countries are also in different phases of their housing cycles, with real house prices rising fastest in sweden and norway ( slide 14 ). some specificities in finland in finland, housing lending is one of the key business segments of universal banks, and the loan market is dominated by the three largest banks. average maturities of housing loans are short in nordic comparison, and non - amortising loans are almost non - existent ( slide 15 ). loans are predominantly tied to variable interest rates and funded mainly by deposits and, increasingly, by covered bonds ( slides 16 – 18 ). over the past 5 years there has been a soft, if lengthy landing in the finnish housing market, reflecting the protracted economic downturn. the housing loan cycle in finland is now passing its second trough after the burst of the global financial crisis ( slides 19 – 22 ). the average interest rate on new housing loans has reached a record low, being the lowest in the euro area ( slides 23 – 25 ). yet, growth in housing lending is only slowly

of the macroprudential tools are yet to be tested in practice. therefore, the consequences and effectiveness of these instruments are still largely uncertain. it is, however, clear that we are moving in the right direction. the authorities responsible for financial stability have stronger mandates, more analytical tools and better - targeted policy instruments to mitigate housing - related systemic risks than ever before. mortgage lending in the future in the areas of retail payments, large corporate finance and consumer credit, european integration is already advanced and cross - border activities are day - to - day business. in some of the remaining areas of finance, sme lending in particular, corresponding developments require more time owing to the more complicated and work - intensive credit risk assessment. the regulatory and supervisory framework is becoming more harmonised across europe, creating a level playing field for banks. in addition, there are specific trends and factors that are likely to touch housing finance, in particular ( slides 34 – 35 ). examples of such developments include common standards in collateral valuation, innovations in financial technology, advanced data mining and credit risk scoring, and the already widespread use of online banking services. furthermore, mortgage brokers, special firms that arrange loans, may gain a stronger foothold in housing finance, as has happened increasingly in germany. to sum up, the conditions for increasing international competition and integration in mortgage lending are improving. while the mortgage credit markets are still very national and regional in nature, it is likely that a considerable change is already underway. this will have a substantial impact on banking, especially in the euro area, where there is no currency risk in cross - border lending. we have to make sure that this welcome development is managed in a way that ensures the stability of the housing markets and housing finance. bis central bankers ’ speeches