KIM regulation is expiring: easier access to housing loans in sight!

KIM regulation is expiring: easier access to housing loans in sight!

The KIM Regulation, which set strict guidelines for home loans since it came into force on August 1, 2022, will expire in June 2025. This was announced by the Financial Market Stability Board (FMSG), which no longer sees any systemic risks that would justify an extension. The rules of the regulation had previously set a maximum loan term of 35 years, 20 percent equity was mandatory, and the monthly repayment rate could not exceed 40 percent of net income. As a result, loan defaults fell and banks were better capitalized, as well wirtschaftswissen.at reported.

Although the KIM Regulation is ending, credit institutions must continue to comply with established lending guidelines, and the Austrian National Bank (OeNB) and the Financial Market Authority (FMA) will closely monitor compliance with these regulations. It is planned to introduce additional capital buffers to reduce credit risk. Experts expect the easing of regulations to make housing loans easier for households, while at the same time encouraging banks to act responsibly and maintain stability. In the construction and real estate sectors, this could trigger a new wave of investments and projects as demand for loans could increase again.

Consequences of the repeal of the KIM regulation

The KIM Regulation played a crucial role in the regulation of real estate financing in Austria, especially in times of high real estate prices and low interest rates. The strict requirements were intended to prevent excessive indebtedness and ensure the financial stability of banks and borrowers. With the expiry of the regulation, banks are now obliged to carry out careful credit checks to ensure responsible lending. This regulatory situation had previously resulted in many buyers having difficulty obtaining suitable loans, significantly reducing the number of property purchases, as reported by 5min.at was presented.