The policy intervention from the Central Bank side would lean towards tighter lending standards for households that are not yet in distress. At the national level, regulation on lending standards will also need to reflect uniformity across entities that are not supervised by the Central Bank.
It is a macroprudential concern—meaning that it could undermine the stability of the financial system in a general sense, if left untreated. In the extreme, it could affect how the economy in the aggregate is able bounce back from natural disasters. The Central Bank’s medium-term approach will be to also explore how the incidences of under-insurance on mortgaged properties could be suppressed.