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Mortgage market: stress test will scare the banks

The banks to reduce the pace, warned the Swiss national Bank in the last few months on a regular basis. The financial market Supervisory authority (Finma), doub

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Mortgage market: stress test will scare the banks

The banks to reduce the pace, warned the Swiss national Bank in the last few months on a regular basis. The financial market Supervisory authority (Finma), double after. Because in the case of investment properties, the risks grow. The prices for the so-called concrete gold continue to rise, Rents fall and vacancy rates are at a record level. Thus, the risk for price corrections and thus the risk for loan defaults on the rise, according to Finma "anyway risky Segment of the yield on residential real estate".

many of the banks saw long no Problem. Such as Raiffeisen, the market leader, grew up, in the case of the mortgage loans in the last few months, again better than the market. However, because of the strong capitalization and the low loan-to-value of the objects, the Institute sees itself as well equipped. More domestic-oriented banks.

Other reacted to the overheating tendencies and were more careful. For example, the major Bank UBS. "We have reduced in the last years, around 25 percent of our volume of lending for investment properties, especially for multi-family homes," said UBS-Switzerland-in-chief Axel Lehmann, most recently, of the "Sunday newspaper".

The Finma wanted to know exactly. She was seen with a so-called stress test around 20 money houses in more detail. As in the case of bankers, seem to have been discovered at several institutes problems. The Finma on the results of the stress tests. But: "Although these stress tests have an institution-specific focus and, therefore, not an assessment of the overall market to target, confirm you real estate actually increased risks in the Segment of yield," says a Finma spokesman.

industry Association is active

This insight is now apparently also with the banks. The bankers Association of wool to develop a more rigorous self-regulation in the mortgage market, according to the Association yesterday. "If the action is confirmed, will we adapt as a precautionary measure, our self-regulation," says Philipp Halbherr, member of the Executive Board of the Swiss bankers Association.

A working group of the industry Association will present its findings and actions to the Board of Directors in the second quarter of 2019. First proposals have already been publicized: for example, the amortization period of the mortgage is to be reduced, or the loan-to-value ratio of the property is reduced, so the industry Association.

ripe is still so, there is nothing. But just the fact that the industry is responding, is a departure from the previous rates of the banks. So far, they stood on the position that it is sufficient, if the Finma intervene in those institutions screw-in, what to major risks. You would then have, for example, can require that a Bank assigns to a vulnerable real estate portfolio of more capital. The work done by the Supervisory authority in the past already.

but Because the entire market has a Problem, is not enough. "Isolated measures at the level of individual institutions alone are not suitable to the increased risks in the mortgage area to adequately deal with," says a spokesman for Finma. With effective adjustments of self-regulation or the regulation of the risks can be reduced in the mortgage sector. This was managed in the field of mortgage loans for self-occupied properties and is also now welcome.

banks should, therefore, take urgent concrete measures to mitigate the risk. Until that happens, the risks in the mortgage market.

(editing Tamedia)

Created: 20.03.2019, 21:37 PM

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