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Michael Voigtländer / Jonas Zdrzalek IW-Trends No. 1 14. April 2022 An Analysis of the Current Risk Levels in Residential Real Estate Financing in Germany

The German Federal Financial Supervisory Authority (BaFin) is keeping a watchful eye on the granting of housing mortgages and from 2023 on will require lending banks to increase their equity capital to cover potential risks.

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An Analysis of the Current Risk Levels in Residential Real Estate Financing in Germany
Michael Voigtländer / Jonas Zdrzalek IW-Trends No. 1 14. April 2022

An Analysis of the Current Risk Levels in Residential Real Estate Financing in Germany

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German Economic Institute German Economic Institute

The German Federal Financial Supervisory Authority (BaFin) is keeping a watchful eye on the granting of housing mortgages and from 2023 on will require lending banks to increase their equity capital to cover potential risks.

The present paper examines the extent to which the risks of lending to housing buyers have really increased by looking at how both overall credit volumes and the credit products themselves have developed. Although the total volume of housing loans has indeed risen, it has remained in line with expectations in comparison with other countries and with house price and interest rate movements. In previous years, lending had actually failed to grow as much as expected. While mortgages have tended to manifest higher loan-to-value ratios, amortisation rates have risen and interest rates have been fixed over longer periods. A risk analysis for follow-up financing shows that interest rate risks have increased over the years but are still relatively moderate. However, the proportion of loans with a loan-to-value ratio of more than 100 per cent is striking. In view of this, it is important that banks insist on an adequate minimum repayment rate. On the other hand, our study also highlights the gaps in the currently available data, which include neither the age of the borrowers nor any additional collateral.

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An Analysis of the Current Risk Levels in Residential Real Estate Financing in Germany
Michael Voigtländer / Jonas Zdrzalek IW-Trends No. 1 14. April 2022

An Analysis of the Current Risk Levels in Residential Real Estate Financing in Germany

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German Economic Institute German Economic Institute

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Methodology and First Results
Christian Oberst / Michael Voigtländer IW-Trends No. 4 17. December 2021

A Hedonic Rental Price Index for Retail Properties in Germany

Despite their importance for users, investors and urban development, there is no appropriate monitoring of rent prices for retail properties in Germany. Comparing average rents alone is of limited benefit as the composition of location and quality properties ...

IW

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Michael Voigtländer IW-Report No. 28 18. June 2020

A Perfect Storm for European Office Markets? – Potential Price Effects of the Covid-19 Pandemic

The Covid-19 pandemic is not only endangering the health of people worldwide, but also causes an economic recession. Given past experiences, office markets, specifically the prime market, reacts very strongly to economic downswings. This paper attempts to ...

IW

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