Mr. Vasileios Madouros:

I will start from the middle point, which I agree with. One of the roles of the financial system in society is to intermediate funds from those who want to save towards those who want to borrow. That is one of the key functions of the financial system. However, that function entails risks, and risks also need to be managed. It is important to recognise that sometimes risks can become excessive. If there are excessive risks, that can entail very large costs to society like we saw in the previous financial crisis. That is what I think everyone wants to avoid. I understand the perspective of the importance of intermediating funds to those who want and need to borrow to purchase a home. However, that needs to be done in a managed way.

Returning to what I was saying earlier, the underlying issue in the housing and mortgage market is much more in relation to the supply of housing. The mortgage market has grown in recent years. There have been more mortgages issued. It has been growing at a rate where the lending standards have remained sustainable. However, if the supply of housing is not there, that then basically means we are seeing higher house prices and rents for the economy relative to incomes. In an environment such as that - borrowing more relative to someone’s income - the effect that would have is more money chasing the same number of properties and increasing house prices even further. That is what the mortgage measures are there to try to guard against.