mojmir hampl : czechs and austrians – even closer than they appear speech by mr mojmir hampl, vice governor of the czech national bank, at the wirtschaftskammer osterreich, vienna, 14 november 2012. * * * ladies and gentlemen, dear guests, it is a great honour and utmost pleasure for me to speak here today. and believe me, these are not just standard nice opening words. i really mean it. as if there is anywhere i particularly enjoy visiting, it is vienna and also austria as a whole. and as the statistics show, the same goes for many czechs. more than two million of us visit austria annually, and the number is going up every year, regardless economic circumstances ( not the other way around ). this is not due solely to the typical and widespread enthusiasm among czechs for skiing. many czechs simply like austria as a country. it would be hard for me to find a czech who does not feel good, safe and comfortable here. and it is no accident. so, please forgive me if i do not discuss today macroeconomic trends, the extraordinary synchronisation of economic cycles in our two countries, and factors behind continually rising mutual trade. much of this will be surely covered in the discussion. there is something else i would like to talk about. i would like to make a personal comment about the closeness of our two countries. after several years spent within the austrian financial group erste and its czech daughter bank, after many visits to austria on business and on pleasure, and after many working meetings with austrian partners on various occasions, i have become convinced that czechs and austrians have a very similar mentality and share many habits and customs. i would even go so far as to say that hardly any other nation is so similar to the czechs than austrians – maybe not even the slovaks. there are many on either side who will not like this thesis, but i believe there is a lot of truth in it. not only are czechs and austrians typical small savers with a conservative approach to money and debt, and not only do they have similar cultural attitudes to those many petty things important for our lives, from the culture of alcohol drinking to obsession with academic titles, from very similar attitude to clothing to shared mania with sometimes overly bureaucratic procedures here and there. and from comparable attitude to what we deem as the so - called status products in our lives to similar phenomenons and problems

been able to widen their margins. the government has helped to sustain that competition by putting in place arrangements to encourage the continued securitisation of housing loans. the australian office of financial management ( aofm ) has been buying mortgage - backed securities from these lenders at yields that, during the crisis, were well below those in the secondary market ( though still very attractive in absolute terms ). this helped keep the cost of funds to these firms at levels that allowed them to continue lending, albeit at a much reduced rate from that of earlier years. the government has recently announced an expansion in the aofm program. at the same time, issuers of mortgage - backed securities are finding that, with market spreads having narrowed substantially in recent months, it is again becoming economic to issue securities into the market. as my colleague, guy debelle, said last week, the australian securitisation market, like securitisation markets everywhere, has suffered reputational damage from the events in the united states. however, australian mortgage - backed securities have not experienced credit problems. i am confident that this fundamental point will eventually see the local securitisation market return to being an important source of funding for housing loans. in the meantime, increased lending by banks means that total new loan approvals are relatively high. in fact, new loan approvals are at levels which indicate a degree of homebuyer activity that has typically been associated with rising house prices ( graph 7 ). at the same time, however, existing borrowers are continuing to take advantage of the low level of interest rates to make accelerated loan repayments, which is restraining the overall growth of housing credit. even so, housing credit is growing at an annual rate of 7 – 8 per cent, a pace which is more than adequate to fund the new investment in housing that is needed. graph 7 housing loan approvals and prices % % year - ended housing price growth ( lhs ) 2. 0 1. 8 1. 6 1. 4 1. 2 housing loan approvals * ( rhs ) - 5 - 10 1. 0 0. 8 * as a share of the value of the dwelling stock ; excludes owner - occupier refinancing and investor approvals for new construction and by ‘ others ’ sources : abs ; apm ; rba why are dwelling prices high in australia relative to income? there is a common perception that house prices relative to household income in australia are high both compared with