It is to be expected therefore that housing credit will expand quite fast for the foreseeable future as the financial sector expands toward advanced economies’ levels. This is quite a rational reaction of creditors and borrowers to the economic situation and may accelerate for those countries that join or are expected to join ERM II and later EMU.
In those countries, the reduction of the risk premium and perceived policy stability will also encourage credit expansion. While from a macroeconomic point of view all these developments may seem quite  BIS Review 13/2007  3  predictable, there is a fear that both borrowers and lenders in these countries may not have an adequate understanding of the risk they are taking.