Regulatory Alerts2019-06-27
Added · Updated
Warning of the European Systemic Risk Board on medium-term vulnerabilities in the residential real estate sector in Iceland
The European Systemic Risk Board identifies medium-term vulnerabilities in Iceland's residential real estate sector as a source of systemic risk to financial stability, primarily driven by high household indebtedness and potential house price overvaluation. The Board notes that current macroprudential measures are only partially sufficient to mitigate these risks, particularly regarding highly leveraged households. It recommends that Icelandic authorities consider implementing explicit guidelines on income-based borrower measures, such as debt-to-income limits, to prevent excessive indebtedness and ensure the resilience of both borrowers and credit institutions.
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