Germany eases property regulations as real estate concerns subside, ET RealEstate
FRANKFURT: Germany is loosening a regulatory measure designed to soften the blow of a property crisis, a sign that officials are somewhat less worried about the fallout of troubles in the nation’s real-estate industry.
BaFin, the German financial regulator, said on Wednesday that it would trim to 1% from 2% the amount it requires banks to hold as capital for residential mortgage loans.
“The vulnerabilities on the German real estate market have declined significantly, but have not yet been fully eliminated,” BaFin said.
The move frees up capital that banks can deploy for other purposes by an estimated 2 billion to 2.5 billion euros ($2.84 billion), BaFin said.
The watchdog said it would keep in place a second charge of 0.75% – the so-called countercyclical capital buffer – that it had imposed in early 2022.
“The general risk situation continues to pose challenges, however, and the outlook is marked by high uncertainty,” BaFin said in justifying the maintenance of the buffer.
