German Bundesbank warns against bank lending to boiling real estate market – report

Facades of apartment buildings with micro apartments are pictured in the Mitte district of Berlin, Germany August 29, 2019. REUTERS/Axel Schmidt

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BERLIN, April 6 (Reuters) – Germany’s Bundesbank is concerned that banks are lending to overstretched buyers in an overheated property market and reserves the right to impose additional restrictions, the board’s chief executive said on Wednesday. administration Joachim Wuermeling.

He told the business daily Handelsblatt that the issue of residential property loans continued to rise, even as buyers brought in less and less equity.

“The growth is taking place in a market that is becoming increasingly vulnerable due to rising house prices,” he said, adding that there was a risk of buyers becoming over-leveraged.

Wuermeling said rising interest rates also posed a threat, as banks had promised their customers fixed interest rates for 10 years on more than half of all home loans for private households.

“In the midst of an interest rate recovery, banks would still have very low interest rate loans on their balance sheets for a few years, but would already have to pay higher interest rates for refinancing,” he said. he declared.

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Reporting by Emma Thomasson; Editing by Clarence Fernandez

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