Loans for residential properties: finally easier to your own apartment!

Loans for residential properties: finally easier to your own apartment!

Austria's credit landscape is facing a turning point that should delight a number of citizens! The financial market stability committee (FMSG) has decided to soften the strict rules for residential loans that have been in force since summer 2022. According to this, loans could only be taken up to a maximum of 35 years of term and with a monthly repayment of up to 40 percent of the net salary. In addition, the borrower had to apply at least 20 percent of their own funds, which was a major hurdle, especially for young families in an overpriced real estate market. As Today.

new loan gear rules

The capitalization of the banking system has increased, which means that no acute system risk in connection with residential property financing can be determined. Nevertheless, the FMSG warns of existing risks that could be reinforced by decoupling real estate prices and income. This is underpinned by the recommendations of the Raiffeisenbank, which propose an equity ratio of 20 percent and a credit rate of a maximum of 35 percent of the monthly net income. Taking these rules into account, the new standards should be mandatory from July 1st. The maximum loan amount should not exceed 100 times the monthly net household income in order to avoid over-indebtedness of the borrower, such as Raiffeisen.at explained.

The decision to rethink the strict framework is made by 18 percent since mid -2020, which indicates increasing demand on the real estate market against the background of a continued increase in residential loans. As a consequence, an imbalance develops between supply and demand, which has already determined the National Bank that residential properties are overrated by 30 percent. The FMSG therefore sees urgent need for action to counteract impending real estate bubbles and thus keep the financial and real estate market stable.