On 9 March 2020, the University of Luxembourg’s Department of Finance came together with EY Luxembourg and the ABBL (Luxembourg Bankers Association) to host a panel discussion on macroprudential policy and its potential effects on the real estate market.
In his keynote speech to more than 50 participants, Daniel Greenwald, professor at MIT School of Management asked the question if macroprudential policy can be effective at dampening booms in the housing market and if so, which limits should be used? A relevant topic in light of the new Luxembourgish law of 4 December 2019 regarding macroprudential limits in the granting of loans to private households for the acquisition of housing. Professor Greenwald explained that his research into the matter has yielded the following conclusion: PTI (payment-to-income) and LTI (loan-to-income) limits are much more effective than LTV (loan-to-value) limit at dampening booms.
Following the keynote speech, Prof. Greenwald’s research results were discussed in a lively roundtable with Sofie Waltl, researcher in urban development and mobility at LISER (the Luxembourg Institute of Socio-Economic Research), Gilles Pierre, Head of Banking Regulation at the ABBL and moderated by an expert in real estate finance and Head of the Finance Department at the University of Luxembourg, Ulf von Lilienfeld-Toal. The discussion was followed by various questions and comments from financial industry auditors, who added value to the conversation with differing viewpoints and practical cases.
Following the success of this first collaborative event between industry actors and the Department of Finance, future roundtables have been planned for Autumn 2020.