). special attention should be paid to the residential real estate market, which is closely related to households ’ situation, where some exuberance has been observed in recent quarters. specifically, house purchases posted growth rates exceeding 20 % in 2022 h1 and new lending for house purchase rose by 15 %. also, the rate of change in house prices accelerated to 8 %, confirming the degree of price overvaluation that we estimated in previous quarters. however, counter to the argument that there is exuberance in the real estate market, loans to the construction and real estate sectors continue to decline, the percentage of gdp represented by the stock of lending to households for house purchase stands at 39. 7 % ( 21. 3 pp less than at end - 2010 ) and mortgage lending conditions in the wake of the global financial crisis remain at prudent levels, with warning signals only observed in the interest rate spreads on loans granted at a fixed rate, which stood at record - low levels. nonetheless, the most recent data could suggest a change in trend in this market stemming from the macro - financial setting that i have described. specifically, housing transactions contracted in july, which is significant given that this month usually has a positive seasonal component. also, house prices ceased to accelerate in q2, posting growth similar to the first three months of the year. in any event, we will have to wait for new information to assess this behaviour more accurately, meaning we will need to keep a close eye on this market. as for the public sector, fiscal policy has clearly played a key role since the outset of the pandemic to soften its impact on household and corporate income, thus avoiding more persistent negative effects. the corollary of this has been a significant increase in public debt relative to gdp, which was already high before the pandemic. this high government indebtedness and the likewise high structural budget deficit evidently represent vulnerabilities when faced with a tightening of financing conditions, as is the case at present, and reduce fiscal policy headroom to respond to future shocks. mitigating factors include most notably the higher - than - initially - forecast reduction in public deficit in 2022 and the significant lengthening of the average government debt maturity in spain, which stands at more than eight years and delays the impact of interest rate increases on the public debt burden. in any event, spain ’ s annual public sector financing requirements stand at high levels, around 20 pp of gdp. also,

if the current expectations for rising interest rates are incorporated, the public debt burden will increase from 2. 2 % of gdp at end - 2021 to 2. 7 % in 2024. against this backdrop, allow me to repeat the recommendation i have made on numerous occasions to adopt a medium - term fiscal strategy. this should include immediately setting out a multi - year fiscal consolidation plan for implementation once the economic impact of the pandemic and of the war in ukraine has been overcome. the plan should have broad a household is deemed to have a high financial burden when its financial expenditure minus financial revenue represents more than 40 % of household income. political consensus and be accompanied by an efficiency review of public spending and the tax system, including all tiers of general government. defining the plan early on would generate greater certainty and trust, which is particularly important against the current backdrop of monetary policy normalisation. the potential impact of the current climate of uncertainty on the banking sector calls for exercising extreme prudence estimating the impact of the current setting on the banking sector ’ s profitability and solvency is more complex. first, the rise in interest rates will mean higher returns on new loans and likewise on existing loans at a floating rate. thus, although the volume of credit will presumably moderate in the current setting, gross income will likely increase, particularly in the near term. however, financing costs will also be pushed up. this includes those relating to debt instruments issued in the financial markets and, albeit to a lesser extent, deposits. the volume of deposits can also be expected to rise owing to their higher remuneration and the climate of uncertainty. second, interest rate rises also immediately translate into a downward revision of the valuations of public and private debt securities in institutions ’ balance sheets. however, these lower valuations are only recognised in institutions ’ income statements when such assets become available for sale, but not if the institutions intend to hold them on their balance sheets to maturity. in this latter case, it should be borne in mind that institutions ’ returns on these securities will be lower than on any new issues that are put into circulation. less than half of spanish institutions ’ debt securities ’ holdings were classified as available for sale at end - 2021. the adverse effects of the current and foreseeable setting – which i have referred to previously – on households ’ and firms ’ ability to meet their financial obligations will chiefly become manifest over a broader horizon ( one or two years forward ). as a result, institutions will have