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Consultation process begins for new FMA standards on residential real estate lending.

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The Austrian Financial Market Authority (FMA) has today opened the consultation procedure in relation to its Regulation on Credit Institutions Real Estate Financing Measures (KIM-V; Kreditinstitute-Immobilienfinanzierungsmaßnahmen-Verordnung). By means of this Regulation, the FMA implements the recommendations and rules issued by the Financial Market Stability Board (FMSG; Finanzmarktstabilitätsgremium) for containing systemic risks from residential real estate funding. The consultation period runs until 20 May 2022, with the Regulation intended to enter into force on 01 July 2022.

“The objective of this package of measures is to contain the increasing systemic risks from residential real estate funding in relation to the boom in real estate prices, the fragile low interest environment as well as current loan origination practices,” remarked the FMA Executive Directors, Helmut Ettl and Eduard Müller: “As a result of the volatile economic climate, it is essential when granting a loan that the borrower’s ability to repay the loan, rather than the mortgage collateralisation of the loan, is the primary consideration.”

Key points of the news standards on lending

In accordance with the FMSG’s recommendations and building upon the Oesterreichische Nationalbank’s (OeNB) expert opinion, in this consultation draft of the Regulation, the FMA imposes the following upper limits in connection with the granting of financing for residential real estate, that are newly concluded from 01 July 2022:

  • A maximum loan-to-value ratio of 90%, with a 20% exception quota being granted to credit institutions.
  • A debt service-to-income ratio of a maximum of 40% (10% exception quota).
  • A maximum term of 35 years (5% exception quota).
  • However, a maximum of 20% of all loans in total shall be allowed to exceed these limits.
  • In order to simplify renovations and redevelopments – in particular the transitioning from fossil energy sources towards renewable energy – funding below a € 40,000 de minimis threshold is excluded from these rules (this shall apply for a maximum of 2% of all relevant financing by the respective institution “institution-based de minimis allowance”).

Journalists may address further enquiries to:

Klaus Grubelnik (FMA Media Spokesperson):

 +43 (0)676 88249516 or +43 (0)1 249 59 – 6006