The FMA wants to introduce new minimum standards for the granting of housing loans in 2022, as these are too loose.
Three quarters of property owners have financed their home with a loan. They pay an average of 680 euros per month, according to Reinhold Baudisch, managing director of Durchblicker. The Financial Market Authority (FMA) is concerned about the boom in the real estate market and wants to issue minimum standards for the granting of home loans in 2022. The current award practice is too loose, according to FMA board member Helmut Ettl. This carries risks for financial market stability. The institute does not yet see a real estate bubble. Ettl: “However, we are seeing developments that go beyond what we have known in Austria.” The Financial Stability Committee has also warned of the risks in the real estate loan market. Since 2007 the prices for residential real estate in Austria have doubled, in Vienna it is 140 percent. The increase is credit-driven; since mid-2020, the number of home loans has risen by 18 percent to 94,000. The credit volume increased by 37 percent to 16.9 billion euros. For a floating rate loan, the interest rate is around one percent. With ten years of fixed interest, the interest rate averages 1.35 percent.
Stricter rules for granting home loans
But the standards for granting home loans are not strict enough. Every tenth loan has a term of more than 35 years, with two out of ten loans the repayment rate is over 40 percent of the available net family income, with six out of ten loans the equity share is below 20 percent. For loans with variable interest rates, you have to pay 31 euros less per month than for loans with fixed interest rates, but only if the interest rates remain the same for 20 years. If interest rates rise to the level before the financial crisis, with variable interest rates it is 358 euros more per month, and 77,324 euros more for the entire term. The binding minimum standards stipulate that the equity share is at least 20 percent, the debt service makes up a maximum of 30 to 40 percent of the net income, the credit period is a maximum of 35 years.