Developments in residential property financing are important for the national economy. As the experience of the recent financial crisis has shown, loan defaults can pose a considerable threat to financial stability. Given rising prices and low interest rates, the development of credit volumes is being scrutinised particularly critically. In fact, however, an empirical model shows that the growth in credit volumes is considerably weaker than might have been expected under current circumstances. Moreover, data on loan-to-value ratios, amortisations, loan periods and the borrowers themselves give no indication of additional risks. Further tightening of residential property financing is therefore not only unnecessary but would actually have an unfavourable effect on households and banks.
A Risk Assessment for Residential Property Financing in Germany
- Daniel Bendel / Michael Voigtländer ·
- IW-Trends ·
- 11 Jan 2017