A new law makes it more difficult to provide loans for real estate. The financial service providers in the Tyrolean Chamber of Commerce criticize this. They demand that politicians tighten up the regulations and come up with their own solutions. However, they should only help those affected to a limited extent.
With the new regulation on real estate financing measures for credit institutions (KIM-VO), the Austrian Financial Market Authority (FMA) wanted to create uniform standards for granting home loans. This should reduce the high demand in the real estate market and ensure that only those loans that can also be repaid are actually provided. Since August, borrowers must have 20 percent of the purchase price in equity, the loan interest cannot exceed 40 percent of household income, and the loan term cannot exceed 35 years.
New regulations are not the main reason for the decline in awards
The guidelines would lead to fewer and fewer loans being issued, Tyrol’s financial service providers criticize the Chamber of Commerce. This is exactly what the FMA wanted to achieve with the KIM-VO. Still, the industry is not happy: according to deputy chairman of the department Christoph Kirchmair, lending has fallen by 52 percent since the summer. However, he also admits that this could also be due to the economic situation. Rising interest rates and especially inflation are the bigger problem than the KIM-VO.
Nevertheless, industry representatives are demanding improvements from the government. Michael Posselt, chairman of the specialist group, thinks that it will not be possible to change the guidelines radically, but he sees potential in the exceptions and in the rent allowance.
Solutions, in any case, for those who already own real estate
Finally, real estate attorney Dan Katzlinger presented “creative approaches” to real estate creation despite the KIM-VO. Among them: transferring family property to the young during their lifetime or dividing large houses or plots of land into small units. There is also the option of being liable for the loan with existing real estate or assets. What the financial services companies failed to mention, however, is that some form of ownership is already required for each of these solutions.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
