terms of swiss francs, but only 13 % in terms of us dollars. in the longer term, the weakening in the swiss franc is indirectly contributing to the increase in prices by stimulating demand. second, real short - term interest rates have dropped. there has been a rise in expected inflation for the near future and this means – for given nominal interest rates – lower real expected yields for short maturities. an analysis of monetary conditions in terms of volumes leads to similar conclusions. let us begin with money, which is the best indicator to use if a broad - brush and long - term outlook for the economy and inflation is required. the m1 and m2 monetary aggregates, which were declining until not long ago, have been practically stable for some months. as for m3, it is continuing to exhibit moderate growth. the sub - prime crisis has confirmed the importance of mortgage loans as an indicator of the degree of relaxation of monetary policy. the reason for this is simple. because construction projects are long - term in nature, real estate investment reacts particularly sensitively to interest rates. consequently, mortgage loans were growing at a rate of 5 – 6 % in 2003 and 2004, when our monetary policy was firmly expansionary. these growth rates then declined gradually as we tightened our monetary policy in 2006 and 2007. last april, they settled at around 3. 3 %. the growth rate of other loans – a particularly heterogeneous category – remains high, confirming that the underlying trend in the economy remains dynamic. in december, we emphasised the need to give particular attention to conditions in the credit market in the light of the sub - prime crisis. in order to do this, the snb conducted a survey of 20 banks in march, in which they provided us with information on their intentions and expectations. this survey completed the analysis of credit volumes. it reveals, first, that banks have not significantly tightened lending conditions with respect to either households or companies over the course of the last few months. second, the banks state that, in broad terms, demand for credit has remained unchanged. third, they do not expect any significant change in either supply or demand in the months ahead. thus this survey confirms the conclusions of the analysis of credit volumes which, as we have seen, are continuing to rise. unlike similar surveys conducted in the us and the euro area, it shows that, for the time being, the sub - prime crisis has not led to a deterioration in credit conditions in switzerland. inflation and inflation risks

thomas jordan : real estate, mortgages and monetary policy speech by mr thomas jordan, member of the governing board of the swiss national bank, at the iazi, schweizer immobilienkongress 2009, zurich, 10 november 2009. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * there is a close interrelationship between real estate, mortgages and monetary policy. on the one hand, monetary policy impacts on the real estate and mortgage market. when the central bank reduces interest rates, this eases the burden on household and company budgets and fosters the demand for real estate. on the other hand, monetary policy also takes account of developments on the real estate market because these can affect economic growth, inflation and financial stability. once again, the current financial crisis has thrown these interrelationships into sharp relief. problems in a number of mortgage and real estate markets – in particular in the us and the uk – triggered the financial crisis and plunged the global financial system into a systemic crisis. this impacted on switzerland ’ s financial stability and made it necessary to create the stabilisationfund for the transfer of illiquid ubs assets. the swiss real estate and mortgage market played a positive role in various measures adopted by the snb to handle the financial crisis. swiss mortgages played a role in securing swiss financial stability in the limmat pfandbrief transactions, whereby big banks improved their refinancing situation by issuing covered bonds. consequently, switzerland – unlike other countries – was able to avoid introducing state - guaranteed bonds. with the drastic reduction in key rates and the subsequent decline in mortgage rates, the burden on households and companies was eased. in this way, the severity of the recession was somewhat alleviated and the risks of deflation reduced. however, the interest rate is now at a historic low and this means medium - term risks for the swiss real estate market and financial stability. experience shows that periods of low interest rates provide scope for excesses on the mortgage and real estate market. consequently, in the current environment in particular, attention should be given to ensuring that past mistakes are not repeated. caution must remain the watchword when granting loans.