Regulatory Alerts2019-06-27
Added · Updated
Recommendation of the European Systemic Risk Board on medium-term vulnerabilities in the residential real estate sector in Luxembourg
Luxembourg must establish a legal framework for legally binding borrower-based measures, including limits on debt-to-income, debt-service-to-income, loan-to-value ratios, and loan maturities, by 1 July 2021. Pending this framework, national authorities must apply non-legally binding borrower-based measures to prevent significant shares of borrowers from taking on unsustainable mortgage debt. The recommendation also urges a review of structural policies, such as mortgage interest tax deductibility, to curb factors driving excessive household indebtedness and house price growth. Luxembourg is required to submit interim and final implementation reports to the ESRB and the Council by October 2020 and March 2021 respectively.