The Financial Market Authority (FMA) has issued the “Credit Institutions Real Estate Financing Measures Ordinance”, which will come into force on August 1st instead of July 1st as originally planned. Also new compared to the draft is a higher marginal earnings limit of 50,000 instead of 40,000 euros, the FMA announced on Monday.
In order to facilitate renovations and refurbishments, in particular the switch from fossil fuels to renewable energy sources, financing up to a marginal threshold of EUR 50,000 is exempt from the new requirements.
In the future, 20 percent of the purchase price (including ancillary costs) must be proven in the form of equity to purchase a property, the monthly loan installment may not exceed 40 percent of the monthly available net household income and the term of the financing may not exceed 35 years. Overall, a maximum of 20 percent of all loans at a bank may exceed one of the upper limits.
“The aim of this ordinance is to limit the increasing systemic risks in residential real estate financing in view of the real estate price boom, the turnaround in interest rates, the fragile economic environment and the current lending practice,” said FMA board members Helmut Ettl and Eduard Müller according to the broadcast. “When lending, the focus must be on the borrower’s ability to repay and not on the mortgage security for the loan.”
Source: Nachrichten
