The Impact of KIM Regulation on Housing Loans in Austria: A Sharp Decline of 50.6%

The granting of housing loans in Austria collapsed massively in the first three quarters – by 50.6 percent compared to the same period last year. This is reported by KSV 1870. In the first three quarters of 2023, 44,628 mortgage loans were granted, which means a decrease of 50.6 percent compared to the previous year.

Follow the KIM regulation

In addition to the increased interest rates, the main reason is the KIM Ordinance (Credit Institutions Real Estate Financing Measures Ordinance). Young people up to the age of 35 are particularly affected, for whom the “dream of owning a home” is becoming increasingly rare. In this age category, the number of loans granted has recently fallen by 57.6 percent, which is the highest value. At the same time, the general financing volume also fell by an average of seven percent to 196,000 euros.

The most common reason for the crash: the high requirements of the KIM regulation, which has been in force since August 2022 and represents an enormous hurdle for financing. In comparison, repayment loans declined significantly less, falling by 11.5 percent.

The decline was greatest in Vienna (-57.6 percent), followed by Tyrol (-52.2 percent) and Vorarlberg (-51.8 percent). The “lowest” decline was in Carinthia at 46.7 percent. The KIM regulation hits people across Austria with full force. Fewer and fewer people can afford a loan to finance their own home.

Creditor protectors question the regulation

In times of rising interest rates and economic turbulence, it is becoming almost impossible for many private households to create a financially secure foundation for the future. The KSV 1870 therefore questions the KIM regulation in its current version and advocates for more flexibility. “We expect this to result in lending that adapts to the respective economic conditions and does not exclude applicants from the outset,” explains Ricardo-José Vybiral, CEO of KSV 1870 Holding AG.

Young people suffer especially

Mortgage loans granted are declining sharply across all age groups. The group of people up to 35 years old, who are particularly relevant for buying a new home, is particularly affected. Here the minus is the most serious at 57 percent. As a result, this age group is no longer “responsible” for 41.2 percent of all mortgage loans, as in the previous year, but only for 35.9 percent. “On the one hand, young people in particular are encouraged to invest in real estate in order to prepare for the future, but on the other hand, the entry hurdles are set in such a way that they are simply not feasible, especially for the younger generation,” says Gerhard Wagner, Managing Director of KSV 1870 Information GmbH, who says: “The crash in lending is also affecting the construction industry. The order situation is falling. There is a lack of new residential construction projects because costs are high and demand has fallen. This is unlikely to change in 2024 either.”