Responsible mortgage lending consists of more than the right loan size and attractive interest rates. Protecting against risks should not be neglected, especially against the background of the corona pandemic. However, Germany is still lagging far behind in this regard.
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By Pierre-Olivier Brassart, CEO and Chief Representative of BNP Paribas Cardif in Germany
For most people, buying a property is one of the biggest financial decisions in life. The desire to have your own four walls or a home for the family should be realized. The purchase of real estate also serves as a capital investment and as a pillar of your own retirement provision. The Sparda study “Living in Germany 2019” shows that 47% of Germans are property owners. The same study indicates that Germans finance an average of 81% of their property through a loan. And to mention another important number: on average, a borrower pays off their mortgage over 30 years. During this credit period, strokes of fate such as an accident, death, illness or unemployment can threaten the installment payments and, in the worst case, your own home.
Crises make clear the importance of protection
In the course of the corona pandemic, many people are confronted with this scenario, for example when their own job is threatened. It then becomes even clearer how important it is to secure real estate loans. In view of the terms and the amount of the loan, acting responsibly with this form of financing would mean that adequate insurance solutions are available to people. Germany has some catching up to do on this point.
Where does Germany stand in international comparison?
The “Protect & Project Oneself” study by BNP Paribas Cardif from 2019 showed that only 26% of the German respondents who have taken out a real estate loan to date have secured the loan against unforeseen risks, mainly against the risk of death. According to the study, Germany is at the bottom of the list in Europe alongside Poland, for example, when it comes to securing property financing.
In other countries, the question of securing such a far-reaching financing decision and thus of protecting relatives in the event of an incident is a matter of course. In France, for example, insurance solutions related to mortgage loans are recommended by banks and advisors. According to the “Protect & Project Oneself” study, 73% of the French surveyed have mortgage protection. Fifteen years ago, the market situation in Italy was similar to that in Germany today. Almost 40% of private real estate financing is now insured there. Japan is also an interesting example: there, borrowers mostly opt for insurance cover – in the past mostly against the risk of death. BNP Paribas Cardif has launched additional products on the Japanese market in recent years. A borrower can now purchase an insurance policy there that covers him and his family, for example, in the event of a cancer diagnosis.
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