chosen to focus our supervisory efforts in five specific areas. the first concerns banks ’ business models. at the heart of our work lies the question of the consequences that the sustained period of low interest rates will have for the various institutions and their business models. if they are forced to adjust their business models, banks could potentially move into riskier areas in search of yield. that would increase not only the risk of bubbles in financial markets, but also the level of risk within individual banks. we will therefore be looking very closely to see whether banks are adjusting their business models, what direction they are moving in, and what risks that involves. our second priority concerns credit risks. we are continuing to see large stocks of nonperforming loans in certain banks. in order to address this problem at european level from a supervisory perspective, we established a dedicated working group last year. that working group has been tasked with developing and implementing a consistent supervisory approach aimed at supporting a reduction in those large stocks of non - performing loans. however, this bis central bankers ’ speeches second priority is not just about non - performing loans ; it is also about cluster risks – the concentration of exposures in specific sectors, such as the property sector. the third priority is banks ’ capitalisation. it is clear that banks have significantly increased their capital since the crisis ; and from our perspective, the capitalisation of the european banking system as a whole is satisfactory. our focus will be on two things. first, we will be looking at the new requirements concerning the capital components that absorb losses in the event of a bank becoming insolvent. “ tlac ” and “ mrel ” will be the key terms in this respect. second, we will again be looking very closely at what exactly constitutes capital, as well as establishing an overview of the banks ’ internal models and processes used to determine the capital requirements. the fourth priority is banks ’ internal risk management. against the background of low interest rates, cheap refinancing and low profitability, it is increasingly important that banks manage risk in an appropriate manner. to do that properly, managers need sound data on which to base their decisions. we will therefore be formulating specific requirements concerning risk management and data quality. our fifth priority will be banks ’ liquidity. the 2008 financial crisis showed how dangerous liquidity problems can be – not just for individual banks, but for the financial system as a whole. some banks are failing to meet our expectations in terms of the management of

. however, given the sizeable volume of repayments and the relatively small share of new loans as a proportion of the total stock ( owing to the long duration of mortgage loans ), the stock of mortgage credit rose by just 1. 4 % year - on - year in march 2022. in turn, the stock of credit to construction and real estate development continued to decline. indeed, new housebuilding has not recovered with the same strength as demand for housing, and this is probably being reflected in house prices. specifically, in 2022 q1, housing investment accounted for 5. 4 % of gdp ; this compares with 6. 2 % in 2020 q1 and is less than half the figure recorded during the real estate boom in the run - up to the global financial crisis. average debt - to - gdi and debt burden - to - gdi ratios increased in 2020 owing to the decline in gdi. the recovery in gdi drove down these ratios in 2021. indicators of price imbalances on the real estate market have been showing some minor signs of overvaluation since early 2020. these indicators climbed slightly in 2021 and could increase further if the acceleration in house prices observed in 2022 q1 takes a firm hold. 3 yet prices are close to their equilibrium levels and distant from the levels reached in the runup to the global financial crisis. in any event, they will have to be closely monitored in the coming quarters. the ongoing macro - financial developments may affect this variable in opposite directions. the downside risks to households ’ disposable income and the likely tightening of financial conditions could curb the recent increases. but the sharp growth in the cost of construction materials, which could pass through to a greater or lesser extent to final prices via a decline in activity in the sector, and the role of real estate property as a safe haven in times of financial market volatility, could have the opposite effect. year - on - year growth in house prices accelerated from 6. 4 % at december 2021 to 8. 5 % in 2022 q1. there was no substantial change in credit standards for new residential mortgages in 2021. average borrower loan - to - value ( ltv ) and loan - to - price ( ltp ) ratios in new mortgages held steady in the year. nor were there any significant changes in the proportion of mortgages with a higher level of leverage ( those with ltv or ltp ratios over 80 % ). 4 conversely,