This is a bitter pill for both consumers and banks: the stricter credit regulations for real estate overturn the instrument of interim financing. What sounds bulky is likely to affect tens of thousands of consumers. An example: If a young couple owns a condominium, pays off loans for it and then wants to finance a larger place to live because the family is growing, this will be quite difficult in the future.
No longer creditworthy despite wealth
So far, interim financing has been set up to bridge the time between buying a new home or building a new home and selling the previous home. The expected proceeds were taken into account as a special repayment in the new loan. This is no longer possible, the loan amount will inevitably be much higher. This increases the likelihood that borrowers will no longer be able to overcome the new hurdle of the credit restriction, namely that the monthly rate may only be 40 percent of household income.
The banks have been up in arms against this undesirable side effect of the innovations. In vain. Last talks were held yesterday. But the Financial Market Authority (FMA), which drafted the regulation, is not prepared to make any changes, which it also confirmed.
BKS boss Stockbauer: “It’s almost discriminatory”
Herta Stockbauer, head of the bank for Carinthia and Styria, is very concerned about this. In the reality of banking, it is very often the case that existing assets that are not yet liquid, such as a life insurance policy that will expire in five years, a share in a cooperative apartment or a restructuring loan, are of course taken into account. All history.
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“That is almost discriminatory,” says Stockbauer about the new regulation, “because it interferes very much with borrowers’ freedom of choice.” She locates a clear worse position. “These are usually very good customers,” says Stockbauer. She is particularly annoyed that it hits them of all people.
Banking Association bites on granite at FMA
The aim of the stricter credit guidelines is to dampen the recently overheated real estate market – a consequence of the ECB’s zero interest rates. In the talks with the FMA, Bernhard Freudenthaler from the Association of Banks pointed out that the enormous cost increases in construction and the rising interest rates – the ECB’s next rate hike could even be very strong at 0.5 percent – are likely to dampen the market implemented the guidelines of the Financial Market Stability Board. Freudenthaler: “One downside will be that there will be even more urban sprawl far away from the cities.”
The FMA, meanwhile, is playing the ball back to the banks: “For interim financing, an exceptional quota of 20 percent of a bank’s new loan volume is provided,” said FMA spokesman Klaus Grubelnik. This means that interim financing is still possible. The reference sounds good, but has only one “catch”: Because they are intended for all exceptions related to the new credit screws. Stockbauer: “That will be exhausted very quickly.”
EU boost for sustainable investments
However, the BKS boss traveled to Vienna for a press conference on Tuesday for another reason. From August, following an EU requirement, banks will also ask customers whether they want to invest their money sustainably.
Because the “how” of this question could be important for success, the Institute for Advanced Studies (IHS) tested some variants in a large field test with 2254 people on behalf of the National Bank and the FMA. The result: Roughly speaking, any kind of somewhat more detailed information increases the willingness to invest. Detailed questions also revealed that certain security aspects “pulled”. Specifically, investment products (funds) with legally sustainable standards were more in demand than others.
Stockbauer expects the new obligation to provide information to raise awareness of sustainable investments. “I think there will be another push.” The financial sector is now at the center of the transformation. “We have to activate a lot of private capital,” says FMA board member Helmut Ettl. After all, in Austria there are private deposits amounting to 300 billion euros.
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