The sustainability of household indebtedness and related credit risks when interest rates rise depend on the ability of households to service their debts and on their buffers. In the euro area, despite increased indebtedness, households have comfortable buffers.
Debt-to-asset ratios are sufficiently low in the euro area as a whole, and the ability of households to service their debt is not expected to be substantially affected by potential future increases in interest rates. Of course, the impact of higher rates on household debt-servicing costs will differ across countries and socio-economic groups.