Housing market
Financial supervision loosens requirements for real estate loans
The real estate market in Germany has cooled down after a long boom, worried about overheating. Now the financial supervision reacts. Consumers could benefit from this.
According to the financial supervision Bafin, the location on the market for residential real estate has relaxed. Therefore, she loosens the credit specifications for banks. As a result, the institutes could be given to consumers cheaper loans for apartments and houses.
Specifically, the Federal Financial Supervisory Authority (BAFIN) is reduced by two to one percent in April 2022, with which banks are to secure residential property loans. In the introduction of the buffer, banking associations would have warned that private housing construction would be more expensive, among other things.
Real estate market has cooled down
Housing properties have become significantly cheaper since mid -2022, the highlight of the years of boom. The main reason was significantly increased interest rates – loans were more expensive. Many people can no longer afford their own four walls, sellers had to reduce their prices. Real estate prices have stabilized since last summer.
At the same time, Bafin warns that there are still “increased uncertainties”, for example because of geopolitical tensions and trade conflicts as well as the economic weakness in Germany. This could burden the still quite robust labor market “so that the probability of default could increase in residential property loans”.
Risks for the export -dependent German economy
For general risks, among other things, because of the economic weakness, banks have to provide for addition. The so -called anti -cyclical capital buffer remains unchanged at 0.75 percent. The quota refers to the risk -weighted assets of an institute. These are the entire assets of a bank – such as loans to customers – multiplied by their respective risk weight. The less risky an asset, the less equity a bank has to hold.
According to BaFin, Germany’s banks have more than 20 billion euros in capital buffers in total. This can release the supervision in the event of a crisis so that the institutes can compensate for losses and are not forced to limit their loan offer excessively.
dpa
Source: Stern
