Austria’s Financial Market Authority to Investigate Banks’ Lending Standards Due to High Proportion of Variable Housing Loans

Austria’s Financial Market Authority (FMA) wants to take a closer look at banks’ lending standards. “This will be one of our test focuses,” said FMA board member Helmut Ettl on Monday in the business journalists’ club. The reason for this is the high proportion of variable housing loans in Austria compared to international standards. In the Alpine Republic, around every second loan has a variable interest rate.

What is striking is that the proportion of variable loans has increased significantly since the European Central Bank’s interest rate change, said Ettl. We will examine why this is the case and whether the banks acted negligently here. The increase in the key interest rate to 4.5 percent has an impact on borrowers of variable interest loans, as it has increased the monthly loan installment and thus the financial burden for many households. However, the FMA is currently not seeing any higher loan defaults, emphasized Ettl. The proportion of non-performing loans is still below 2.0 percent.