The introduction and calibration of macroprudential tools targeted at residential real estate exposures in the Czech Republic

This article sets out to describe how the CNB makes decisions on the introduction and calibration of macroprudential tools targeted at risks associated with exposures secured by residential property. It answers the following questions: How does the CNB assess the risks associated with exposures secured by residential property? Which macroprudential tools can and should be used to target such exposures, and when? What sorts of risks are DTI and DSTI caps targeted at? How does the CNB determine risky LTV, DTI and DSTI levels? In what situations is it desirable to combine macroprudential tools?