It should be recalled that the growth and employment creation model of the past years is not sustainable: it relied on the expansion of public demand, reflected on the imbalance of public finances and on the expansion of private demand. In turn, the latter was fuelled by the favourable financing conditions enjoyed by households, mirrored in rising indebtedness and lower savings.
Many took up that option.8 The combination of higher interest rates and tighter lending standards contributed to the share of new loans that are interest-only falling comfortably below the 30 per cent limit. The stock of interest-only loans in total housing credit has also declined noticeably, from close to 40 per cent to almost 30 per cent.