While capital buffers like the CCyB strengthen bank balance sheets, regulators also use borrower-focused lending constraints to manage credit expansion in real estate markets.
Key Macroprudential Lending Boundaries
  • Loan-to-Value (LTV) Caps: Restrict the maximum size of a mortgage loan relative to the appraised value of the property, forcing buyers to provide a larger cash down payment and insulating lenders from real estate corrections.
  • Debt-to-Income (DTI) Limits: Lock maximum credit sizes to the borrower’s verified annual income, preventing households from overextending themselves during low interest rate environments.

  Control Mechanism |   Primary Asset Target Focus Area |   Financial Stability Stability Outcome
--------------------+-------------------------------+-----------------------------------------
  LTV Frameworks    | Limits leverage on asset values| Restricts credit loss size if defaults spike
  DTI Restraints    | Ties credit size to income data | Reduces overall househo
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