Macroprudential instruments targeting the Seite 10 von 27 Deutsche Bundesbank, Directorate General Communications Wilhelm-Epstein-Strasse 14, 60431 Frankfurt am Main, Germany, Tel: +49 (0)69 9566 3511 or 3512, Fax: +49 (0)69 9566 3077 presse@bundesbank.de, www.bundesbank.de Reproduction permitted only if source is stated. demand side thus address the probability of borrower default and the losses arising from default.
The probability of borrower default can be limited through restrictions on loan-tovalue-ratios (LTVs), that is, caps on the ratio of borrowed money relative to the value of a residential property. Another set of instruments is related to the ability of households to service debt, thus limiting losses. These instruments include the debt-service-to-income ratio and the debt-to-income ratio.