Business
A new real estate loan regulation has been in force in Austria since August 1st. Lending measures have been tightened significantly since then. Borrowers must now provide at least 20 percent equity.
The new lending rules for housing loans make it more difficult to get a loan. Since August 1, borrowers have had to bring in at least 20 percent of their own capital in order to be able to take out a loan. In addition, the monthly loan installment must not be higher than 40 percent of the total net household income. The maximum term of a loan is also limited to 35 years. The new rules cause problems, because loans are becoming unaffordable, especially for many young people in the country.
FMA hopes for fewer loan defaults
The Financial Market Authority (FMA) hopes that the new measures will result in fewer loan defaults. She criticizes the fact that domestic banks are too relaxed when it comes to granting housing loans. Far too often a loan cannot be repaid. In the last few months in particular, the number of real estate loans has risen sharply. Loans that are already in progress are not affected by the new measures.
What the people of Burgenland say regarding the new regulation
“Subdued demand” for credit expected
So far, no effects of the new guidelines have been noticed in Burgenland, said the banking division chairman of the Burgenland Chamber of Commerce, Alexander Kubin, in the Burgenland-heute interview with Martin Ganster. However, one assumes “subdued demand”. “This demand will not only be subdued due to the real estate credit directive, but also due to external factors such as inflation, rising interest rates or price increases in the area of raw materials,” says Kubin. There has also been a recommendation that 20 percent equity should be provided for a loan and the banks have also tried to comply with this quota, according to the division chairman.
Bank division chairman on lending
Alexander Kubin, head of the banking division in the Burgenland Chamber of Commerce, talks regarding the financing transactions and the new guidelines that have been in force since August.
Kubin expects further interest rate hikes this year – which might also increase the variable interest rates on loans. The fixed interest rate has also increased significantly in the past six months. As a guideline, one can currently assume: for a period of ten years, the fixed interest rate is currently three percent.
Improvements for families and low earners required
“What has to happen and we, the banks and insurance companies in the Chamber of Commerce, have a great interest in the financial market supervisory authority making improvements – especially for young families or for socially disadvantaged people with lower incomes, so that these customers do not get into the rent drives, but makes ownership affordable,” said Kubin. Concrete demands will be worked out.
