Housing Loan Developments in the Central and Eastern European EU Member States

Over the past few years, lending to households2 has grown substantially in most Central, Eastern and Southeastern European (CESEE) countries, with housing loans accounting for the bulk of new lending in many of them. The pace of credit growth has raised concerns about macroeconomic and financial stability, and has been a topic often addressed by economic analysis on the region. The rapid development of housing loans in CESEE has assumed an additional dimension since mid-2007, when the problems in the U.S. housing market started to culminate. Given the topicality of the issue, this short analysis reviews recent major developments of housing loans in the ten Central and Eastern European EU Members States(CEE-MS) and outlines its major driving forces, associated risks, and policy implications, covering the period from end-2004 to end-2007.