The tightened European Union directive on the granting of real estate loans is intended to protect owners of home buyers from later foreclosure. However, their provisions are so stringent that even real estate financing that can be classified as safe is sometimes no longer possible. Moreover, in the case of real estate lending, the banks obviously calculate with a significant increase in costs after the expiry of the fixed interest period, even though such is unlikely.
Strict guidelines for the allocation of real estate loans
The core content of the new European Union directive on real estate lending aims to ensure that builders and homebuyers can fully repay their credit within the statistical life expectancy. The Bank may no longer include a probable increase in the value of the building to be financed in the credit check. For security reasons, almost all banks are tightening the public procurement guidelines significantly beyond the level required by European law. Although they include the presumed later dropping child allowance in the budget, but not the fact that in many cases after the education period, both parents will be working again.
The motive was consumer protection
The motive for tightening the conditions for mortgage lending was entirely in the interests of consumers, who should be protected from over-indebtedness and possible foreclosure of their property. In order to avoid any recourse claims, banks are increasing the requirements for mortgage lending beyond the level required by the EU, which means that many financings are no longer possible. The fact that a debt relief by the later sale of the house or by the letting of part of the financed property after the removal of the children is possible, the clerk of the new EU Directive according to the credit decision may no longer be considered. Not only home builders and home buyers are affected by the tightening of the directives by the European Union, but also homeowners who want to carry out major renovations.
In other states, the impact of the new EU Directive is even greater
The new awarding regulations will increase the rental rate in Germany, since significantly fewer applicants receive a real estate loan than before. In some states of the European Union, the new regulations on real estate loans are even more pronounced. In Finland and Spain, for example, home ownership is more widespread than in Germany. Rental apartments are the exception rather than the rule there, especially since the banks in these countries have so far approved almost every applicant who can afford a reasonable surcharge for maintenance costs in addition to the rent, so far a real estate loan.
It can also be observed that banks in most other EU countries interpret the directive less stringently than in Germany, so that in many cases real estate lending remains possible. By contrast, the fearful implementation of the EU guideline on real estate lending by German financial institutions leads to the fact that the already low ownership ratio in this country will continue to decline in the near future.