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Financial stability: Real estate market overheated: Financial supervision gives banks stricter rules

New home construction

The rise in prices on the residential property market worries the Bundesbank and the financial supervisory authority Bafin. You want to prevent excessive lending.

(Photo: dpa)

Frankfurt The German financial supervisors are alarmed by the rise in prices on the residential property market and are now taking action: In the future, banks should set aside more equity for residential property loans. For home buyers, buying a property will be more expensive and more difficult.

Specifically, the Committee on Financial Stability, which includes representatives from the Federal Ministry of Finance, the Bundesbank and the Bafin financial supervisory authority, wants to activate the so-called countercyclical capital buffer for banks. This means that money houses have to set aside equity capital for their business in addition to the normal requirements. The institutes should reserve an additional 0.75 percentage points for their risk-weighted assets, and even 2.75 percentage points for mortgage lending.

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Reference-www.handelsblatt.com

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