Germany’s Bundesbank warns over bank loans to hot property market -report By Reuters

© Reuters. FILE PHOTO: Facades of house buildings with micro flats are pictured at Mitte district in Berlin, Germany, August 29, 2019. REUTERS/Axel Schmidt

BERLIN (Reuters) – Germany’s Bundesbank is nervous about banks lending to overextended consumers in an overheated property market and reserves the correct to impose further curbs, board director Joachim Wuermeling was quoted as saying on Wednesday.

He advised the Handelsblatt enterprise each day the problem of residential property loans continued to rise, though consumers had been bringing much less and fewer fairness with them.

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“The expansion is happening in a market that’s changing into more and more weak due to rising property costs,” he mentioned, including that there was a hazard of consumers changing into over-indebted.

Wuermeling mentioned rising rates of interest additionally posed a risk, as banks had promised prospects fastened rates of interest for 10 years on greater than half of all housing loans for personal households.

“In the midst of an rate of interest turnaround, banks would nonetheless have very low-interest loans on their steadiness sheets for a couple of years, however would have already got to pay larger rates of interest for refinancing,” he mentioned.

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