The warnings are getting louder: the real estate market is booming, real estate prices are rising and rising, while interest rates are exceptionally low. On behalf of the European Central Bank, the Austrian National Bank is now targeting the domestic financial institutions in order to be able to continue to guarantee the stability of the financial market. As a result, the hurdles for interested parties are getting higher and higher.
The Financial Market Authority (FMA) has tightened the rules for granting loans from August 1st, 2022.
Now, 20 percent of the equity (including ancillary costs) must be proven to be available for the purchase of a property. The loan installment may not exceed 40 percent of the monthly net income, and the term of the loan may not exceed 35 years. This is to ensure that sustainable real estate lending is possible.
According to the National Bank, there will still be a small scope for exceptions (a few percent per EU country) depending on the life situation of the borrower. Existing loans are not affected by these changes.
At this point it can also be mentioned that more than 50 percent of all borrowers are certainly not able to fully meet these standards. As a result, many will no longer be able to afford credit.
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Until the next blog! immotom – find your home.