step three Logical equipment for evaluating home loan financing dynamics and you will household harmony sheet strength

Chart 1

Overvaluation tips suggest the level of RRE rates misalignment, and so are utilized, together with other related signs, so you’re able to assess the fresh drawback risks to RRE pricing

Sources: ECB and ECB data.Notes: Committee a great) The new overvaluation prices are derived from the typical from a couple of measures: a keen econometric design and house speed-to-earnings proportion deviation of historic average. To possess facts, see Package step three – Products to possess detecting a prospective misalignment of belongings costs away from rules – regarding the issue of the ECB Monetary Stability Feedback, and/or Package step three – An unit-dependent valuation metric to possess belongings dilemma of the new ECB Monetary Stability Feedback. To your y-axis, an advantage indication (+) ways overvaluation and a without signal (-) undervaluation. Committee b) Comes from an RRE price-at-chance model centered on a board quantile regression towards the a sample regarding 19 euro urban area regions. Explanatory details: lag away from genuine domestic price development, overvaluation (mediocre out of departure out of household speed-to-income proportion out-of long-identity average and you will econometric model), systemic exposure indicator, user confidence indication, economic markets requirements signal trapping inventory price increases and you may volatility, authorities thread give, hill out of yield bend, euro area low-economic corporate bond give, and you may a discussion regarding overvaluation and you can an economic standards directory. This new dates was basically chosen to recapture brand new pre-COVID months (one-fourth 4, 2019), brand new peak COVID months (quarter dos, 2020), additionally the last one or two offered forecasts (quarter 4, 2021, and you will quarter 1, 2022). Continue reading →