it more effective, fair, and fit for the world of tomorrow. the european commission is in the process of considering inclusion of borrower - based measures into eu law by : ( i ) introducing harmonised definitions ; ( ii ) enhancing the availability of data needed for their effective application ; ( iii ) introducing a minimum, harmonised borrower - based measure toolkit. while the consultations are ongoing, today we have a unique opportunity to discuss various experiences from a diverse set of countries, such as czech republic, denmark, and new zealand. i am especially excited to have mr duncan mills from the reserve bank of new zealand with us today. mr mills, i hope, will shed more light on the widely publicized decision to expand the monetary policy mandate, which now includes the task of supporting more sustainable house prices. in the euro area, housing prices are not part of the monetary policy targets, as residential property price changes are not included in the harmonised index of consumer prices ( hicp ) – the most appropriate measure for assessing price stability. in the recent strategy review of the european central bank, we recognized the need to include the costs related to owner - occupied 2 / 5 bis central bankers'speeches housing in the hicp to better represent the inflation relevant to households. to date, the best tools we have in addressing the risks arising from housing market instabilities fall under the macroprudential framework. a central question we policy makers face today is how to respond to fluctuations in the housing credit market. should we calibrate our borrower - based measures with the aim to increase or decrease mortgage lending depending on where we are in the credit cycle? ladies and gentlemen : i would now like to take an opportunity to share some insights about how the covid - 19 pandemic affected the lithuanian housing market and how possible changes to the borrowerbased measures here became a rather heated topic. when the first country - wide lockdown was imposed in the beginning of 2020, the lithuanian housing market froze – transaction numbers plummeted, and the flow of housing credit diminished. this caused a lot of concern and sparked discussions on the need to loosen borrower - based measures to increase activity in the market. at that time, we allowed credit providers some flexibility when assessing the creditworthiness of individuals experiencing a temporary income drop during the lockdown. we basically chose a wait - and - see approach regarding more substantial changes to the borrower - based measures. it turned out that we were

not wrong in giving the market a minute to sort itself out. only a few months later, buyers returned to the market with increased savings and craving newer, better, bigger housing. months spent in lockdowns forced many households to reconsider their housing needs. when faced with a new reality of working from home, many found themselves in need of a dedicated room for a home office. properties in less central, but quieter, greener locations gained attractiveness in the absence of a daily commute. at the same time, many households, particularly those that were already wealthier, accumulated savings, as lockdowns limited spending while their jobs remained in demand and salaries increased. a combination of increased resources, accommodating financing conditions, and a shift in preference towards more spacious and comfortable housing, sharply pushed demand for residential properties. as we can see in the graph here on the left - hand side, after a sharp drop in transaction numbers in march - june 2020, housing market activity in lithuania rapidly recovered, and soon surpassed pre - pandemic transaction numbers. again, the market slowed down during the period of a second nation - wide lockdown at the end of 2020, but this dip in market activity was neither as deep nor as prolonged as that at the onset of the pandemic. with demand for housing high and supply limited – given that acquiring suitable land, obtaining building permits, and ensuring building supplies and builders themselves takes time – housing price growth in lithuania picked up, reaching 13. 3 % in q2 of 2021 – the most rapid increase since early 2008. at the same time, as you can see in the graph on the right - hand side, the share of lenders ’ portfolio allocated to mortgages continued to increase, with the pace picking up visibly in the recent months. 3 / 5 bis central bankers'speeches and now, only a year after intense discussions on possible loosening of borrower - based measures, we are considering tightening them. after a thorough micro - data analysis and econometrical modelling, we have concluded that there is a need to target a riskier segment of the housing market – those acquiring second or subsequent loans for housing purchases. during the pandemic in lithuania, the share of loans to borrowers who already have a mortgage increased, as illustrated by a graph on this slide. the share of non - primary mortgages particularly increased for housing located in our lovely capital city vilnius and the recreational seaside region – from roughly a tenth