Germany will put the squeeze on mortgage lending over mounting concern that booming housing prices pose a risk to the economy.

The move, by the nation’s Federal Financial Supervisory Authority, comes as the European Central Bank drags its feet about raising interest rates, fuelling a speculative property frenzy across the continent.

Home prices in Germany are soaring as families overcome a traditional reluctance to own property, fuelled by ultralow borrowing costs and low returns on bank deposits, where most Germans keep their savings.

Banking regulators are now warning lenders to be conservative in their mortgage lending, saying borrowers should still be able to pay mortgages if rates rise. They’ve also told local banks to hold additional capital against residential mortgages.

German home prices have surged by almost 60% since 2015, according to the federal statistics agency Destatis. In one of the fastest growth spikes in Western Europe, prices jumped by 12% in Q3 2021, compared to a year earlier. German household debt rose to 58% of GDP in mid-2021 from 53% in 2019, according to the Bank for International Settlements.