Rising House Prices and Ultra‐Low Interest Rates: A Recipe for a New Banking Crisis?

17 Pages Posted: 19 Jun 2017

Date Written: June 2017

Abstract

Are overheating housing markets and rising interest rate risks becoming a breeding ground for yet another banking crisis? We assess these risks for the German case. We find that they are indeed building up and may very well form the basis for a new banking crisis – unless prevented through responsible banking decisions, supervisory guidance, and policy adjustments.

Keywords: banking crisis, banks, housing, housing bubble, interest rate, interest rate risks, real estate

Suggested Citation

Dombret, Andreas and Goldbach, Roman, Rising House Prices and Ultra‐Low Interest Rates: A Recipe for a New Banking Crisis? (June 2017). Economic Affairs, Vol. 37, Issue 2, pp. 254-270, 2017. Available at SSRN: https://ssrn.com/abstract=2988097 or http://dx.doi.org/10.1111/ecaf.12244

Andreas Dombret (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Roman Goldbach

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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