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PRAGUE, May 26 (Reuters) - Using macroprudential tools such as loan-to-volume or debt servicing-to-income ratios seems more beneficial than raising interest rates to tame real estate lending, central bank Vice-Governor Vladimir Tomsik said in an article published on Friday.
He said using the ratios -- which the bank seeks approval for in new legislation now in parliament -- would be less costly to the economy than interest rates, and also allowed for targeted response to market segments where problems develop. "While increasing interest rates will lead to a lowering of real estate prices and will tame the pace of credit growth, it can also have significant negative impacts in the form of a drop in real economic growth," he said in an article in the Bankovnictvi magazine, posted on the central bank website.
He said there has been a further relaxation of credit standards despite limits the bank set on loan-to-value ratios, and that current developments posed a risk a spiral could emerge between house prices and loans. (Reporting by Jan Lopatka)