Housing financing: inquiries decreased by around 70 percent

The real estate and construction industries have already experienced better times than in the past two years. The fact that less has been built and fewer properties have been purchased since 2022 is largely due to the high interest rates and the credit institution real estate financing measures (KIM) regulation. This stipulates, among other things, that the monthly loan installment may not exceed 40 percent of the monthly net household income. In addition, 20 percent of the purchase price must be raised through equity. A big hurdle, especially for young families. “Especially for young people, owning a home is a good way to plan for the future. But these guidelines make both the creation of property and affordable housing significantly more difficult,” says Martin Doblinger, regional director of Sparkasse OÖ in the Schärding district.

• Also read: How Upper Austria will live this year

Josef Knauseder, managing director of the Raiffeisenbank Region Braunau, is also not a fan of the KIM regulation. “Due to rapidly rising interest rates, a significant increase in construction prices and the Credit Real Estate Measures Ordinance, requests for housing financing fell by around 70 percent in 2023,” reports Knauseder. When the KIM regulation came into force in 2022, financial experts feared that, due to its proximity to Germany, an increasing number of citizens from the border region in particular would be able to finance their dream of owning their own home with German banks. After two years of observation, both Doblinger and Knauseder report that this is more of a side issue for them. “I don’t notice any increased activity from German banks,” says Knauseder. The two credit brokers Manuel Haitzinger and Daniel Christl, owners of Viadu from Tumeltsham, have already processed housing loans through Germany.

Loans from Germany

“But only to a very small extent. We prefer to work with Austrian banks,” say Haitzinger and Christl. The credit brokers say that cooperation with German credit institutions usually occurs if this is the express wish of the customer. Katrin Penninger, managing director of Remax fit in Schärding and Grieskirchen, also reports on cases in which financing was realized in the neighboring country.

“Real estate is often financed through Germany. Mainly in borderline cases, such as when the income limit in Austria is not reached. In these cases it is usually the case that lending in Germany is still possible,” says Penninger. According to Doblinger, the fact that Austrians can finance their real estate in their neighboring country more easily than in their home country is due to the fact that the requirements in Germany are not as rigid as they are here. “In Germany there is greater scope for decision-making. The requirement is that the repayment of a home loan must be probable over the entire term. The future living situation, not just the current income, plays a larger role. If it is foreseeable that less in the future “If money is available to service the loan, this has an impact on the granting of loans,” says Doblinger. Another disadvantage of financing via Germany, for example, is that out-of-hours repayments are not as cheap as in Austria.

“The penalty is much higher. Early repayments are not welcome,” say Haitzinger and Christl. So that more dream homes can be financed again in the future, everyone is hoping for a quick change to the KIM regulation and a fall in interest rates.

“The KIM regulation was not necessary and should be abolished as soon as possible,” says Knauseder. Doblinger agrees: “Clear and comprehensive changes are now necessary that take the current economic environment into account. It must be possible to make decisions tailored to the individual situation of potential borrowers. We demand more freedom in decision-making. ” The fact that banks carefully examine the circumstances when granting loans was already the case before the KIM regulation and would not change in the future. “We have always checked the creditworthiness of loan applicants strictly based on their affordability. We have therefore always advised our customers in this direction and talked together about financial feasibility. With the KIM regulation, we banks were forced into a strict corset that gave us flexibility of lending,” says Doblinger.

• How to afford your own home despite rising interest rates

Mild optimism

Despite the still high interest rates, there is a slight sense of optimism on the market.

“The population is feeling less uncertain as inflation is easing and experts do not expect further interest rate increases. This means that the risk for buyers is lower at the moment than it was at the beginning of 2023. However, in our opinion, we have reached the bottom as long as there are no further interest rate increases,” says Penninger. Knauseder is also optimistic. “We are seeing more inquiries again for 2024. Funding for heating replacement and renovation measures in particular is of great interest at the moment.”

info By clicking on the icon you can add the keyword to your topics.

info
By clicking on the icon you open your “my topics” page. They have of 15 keywords saved and would have to remove keywords.

info By clicking on the icon you can remove the keyword from your topics.

Add the topic to your topics.