The Macroprudential Recommendation sets a 90% cap on the loan-to-value (LTV) ratio, where the loan is intended for the purchase or construction of own and permanent residence. For this purpose, the value of the property corresponds to the minimum between the purchase value and the appraisal value.

The aim of limiting the debtor’s maximum level of indebtedness is to lessen their vulnerability to adverse situations that may occur in the future, such as a drop in house prices, an increase in interest rates or loss of income, thereby reducing the risk of the debtor no longer being able to meet their obligations.

For example, a debtor who has taken out a loan in compliance with the limits set out in the Recommendation is more likely to be able to repay the outstanding amount by selling the property if they so wish.