Regulation / banks

Is the Mortgage Credit Directive stifling the property lending business for German banks?

The European Mortgage Credit Directive is intended to provide better protection for bank customers against poor advice. The law which came into force on 21 March to implement the Directive in Germany has however triggered considerable uncertainty. A majority of banks who participated in the Bank Lending Survey already announced in January that they were tightening their guidelines for private mortgage loans. In the April survey – shortly after the rules were adopted – the proportion of banks planning to operate on a more restrictive basis had risen to more than 34 per cent. This is the highest level since the survey began 14 years ago. Under the new rules, a mortgage loan customer is only regarded as credit worthy if they are likely to be able to repay the loan in full. When monitoring creditworthiness, the bank may not rely mainly on the property value or an expected increase…

1 7 8