FMA sets new rules for residential loans: security before leaving!

FMA sets new rules for residential loans: security before leaving!

In the current discussion about living credit in Austria, the financial market supervision (FMA) come to the fore new guidelines. Between January and April 2025, 5.2 billion euros in residential loans were awarded in Austria, which corresponds to a significant increase in two thirds compared to previous years. The increase is primarily due to the sunken interest rate level. This development is accompanied by the upcoming run-out of the KIM Ordinance (credit institutions real estate financing measures regulation) on June 30, 2025. href = "https://www.vol.at/fma-erwartet-solide-wohnkredit-mit-hausverstand/9509804"> Vol.at ).

The KIM Ordinance, which came into force on August 1, 2022, has been necessary in response to drifting real estate prices and income since then. The aim was to minimize systemic risks through excessive lending and to promote the repayment of borrowers. After the regulation has expired, direct control over the banks will be omitted when the real estate loans are awarded. However, the FMA will continue to observe the residential property sector closely ( kpmg-law.at ).

new award criteria

The circular of the FMA presents the new award criteria that are based primarily on three basic rules: The maximum lending rate must not exceed 90 percent, the loan rate should make up a maximum of 40 percent of the annual net income and the maximum term of 35 years is recommended to make the borrower debt-free if possible. These requirements are common in many EU countries and serve as a guideline for solid lending. However, banks are entitled to deviate from these criteria as long as they prove that the risks are covered by their internal risk strategy (.

Although the new rules are not legally binding, deviations from the requirements for banks could lead to higher capital requirements. The FMA has emphasized that monitoring the residential property market will continue to be of great importance in the future, especially since 2010 has been observed steadily drifting out real estate prices and income. There is a real risk of financial stability if the strong price developments continue with the growing borrowing of credit = "https://www.kpmg-law.at/neue-vergestandards-fuer-Wohnimmobilienkredite/"> kpmg-law.at )

Future of residential property financing

The processing of the KIM regulation inevitably raises questions about the future design of residential property financing in Austria. The FMA made it clear that even after the KIM regulation expired, it will not tolerate a negligence in lending. It is likely that the banks will continue to have to adapt their lending practices in order to avoid financial risks and to pursue a sustainable financing strategy.

At the same time, it remains to be observed how the market is developing and to what extent new offers or alternative forms of financing could come to the fore. The challenges that arise from the increasing demand for residential properties and the overvalued prices remain a central topic for the industry and the credit institutions in the coming months ( Vol.at ).