Regulatory Alerts2019-06-27
Added · Updated
Warning of the European Systemic Risk Board on Medium-Term Vulnerabilities in Germany's Residential Real Estate Sector
The European Systemic Risk Board identifies medium-term vulnerabilities in Germany's residential real estate sector as a source of systemic risk to financial stability, citing significant overvaluation of house prices in urban areas and potential loosening of lending standards. The warning recommends that German national authorities activate further capital-based measures to increase banking system resilience and consider implementing legally binding limits on loan-to-value ratios to ensure sound lending standards. It also urges the closure of data gaps regarding lending standards for new mortgage loans to improve macroprudential monitoring and risk identification.