According to the new regulations that were passed last year, the granting of home loans is now supposed to be simplified again. However, this will only affect the so-called interim financing. For the time being, nothing will change in terms of equity capital requirements. Meanwhile, the number of loans granted in the previous year has collapsed.
AUSTRIA. If you want to take out a loan for real estate financing, you need at least 20 percent equity. In addition, the loan rate may not exceed 40 percent of net income. Since August 2022, this stricter regulation has been in place for home loans, which has been criticized by both banks and trade unions. A weakening has long been called for. This has now been fixed.
Equity regime remains
The Financial Market Stability Committee decided yesterday that nothing should change in the strict requirements for equity capital and credit rates. Michael Klien, housing expert from WIFO (Austrian Institute for Economic Research), takes a positive view of this. “In essence, this ordinance is a sensible instrument for reducing excessive lending or excessive debt. I think it makes sense that the foundations are not shaken,” said Klien in the Ö1 morning journal.
Stricter allocation rules will apply from August 1st
Border financing simplified
The weakening of the rules affects the so-called “interim financing” instead. Currently, the regulation stipulates that a property already owned must be sold in order for the value to be counted as equity. That is about to change: With the new regulation, 80 percent of the value of such a property is part of the equity, even if it is only sold later. This should make it easier to move or expand your home.
A second change concerns state grants. So far, these have only been promised at first, but only paid out afterwards. As a result, they were not allocated to equity. In future, however, grants from the federal states will immediately count towards equity.
This new regulation is scheduled to come into force on April 1, 2023. However, it is also questionable whether as many home loans will then be granted as before.
Massive decline in home loans
Since August of the previous year, there has been a massive decline in home loans: In Austria, the granting of home loans has fallen by 40 percent. In addition to the strict rules, the reason for this may also be the rising interest rates.
This is also shown by the country comparison. In Germany, the regulations have remained the same, but the granting of home loans has fallen by 33 percent. According to Klien, the tightened rules should make a difference, but the main reason seems to be that many people simply can no longer afford to own their own home. High inflation also appears to be playing a role.
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