FMA: New lending standards for residential real estate loans

Jun 10, 2022 Benn-Ibler Rechtsanwälte

The Financial Market Authority (Finanzmarktaufsicht, FMA) has submitted the Credit Institutions Real Estate Financing Measures Regulation (Kreditinstitute-Immobilienfinanzierungsmaßnahmen-Verordnung, KIM-V) for review. It changes the lending standards for private residential real estate loans.

The regulation implements the recommendations of the Financial Market Stability Board (Finanzmarktstabilitätsgremium) to limit the systematic risks in debt financing of residential real estate.

Pursuant to Section 2, the regulation applies to CRR credit institutions. Private residential real estate financing for the construction or acquisition of residential real estate by one to a maximum of four natural persons, who must also be consumers who are either secured with a domestic property or, if not, at least one borrower is resident in Austria, is included (Sec. 3 no. 1). Furthermore, the regulation only applies to newly agreed residential real estate financing, whereby the time of conclusion of the loan agreement is decisive (Sec. 3 no. 2).

The following measures for the granting of private residential real estate financing are provided for:

• Maximum loan-to-value ratio of 90%. However, the credit institutions have an exception quota of 20% of loans that can exceed this ratio.
• Maximum debt service ratio of 40% (exception quota: 10%)
• Maximum term of 35 years (exception quota: 5%)
• In total, however, no more than 20% of all residential real estate loans at a credit institution may exceed one or more of these upper limits.

Financing up to a de minimis limit of EUR 40,000 (borrower-related) is exempt. This applies to a maximum of 2% of all new private residential real estate financing agreed by the credit institution concerned (institution-related de minimis quota).

The regulation is to come into force on 01.07.2022 and expire at the end of 30.06.2025. It will then be applicable to new private residential real estate loans agreed in this period.

FMA, Draft Assessment (21.04.2022)