Prices are rising in the German real-estate sector, and lending is on the rise. However, there are no acute signs of an easing of credit standards. Preventive measures can mitigate future risks, though. 3. Risks are accumulating in financial institutions’ balance sheets. The amount of low-interest long-term loans is rising, while the share of low-yielding assets has increased.
This is leading to increased liquidity and interest rate risks. Persistently low interest rates would hit precisely those financial institutions whose business models depend heavily on interest rates. 2. In the current macroeconomic setting, there is a danger of risks being underestimated. Low interest rates are not a new phenomenon.