The Swiss financial regulator has warned banks that rules on mortgage lending may be further tightened if they fail to control their appetite for dishing out real estate credit. Loans tipped the one trillion franc mark in 2018 and continue to swell, particularly in the buy-to-let market.
This content was published on
2 minutes
I write about the rapidly evolving artificial intelligence technology and its possible impacts on society.
Originally from England, I spent some time at the BBC in London before moving to Switzerland to join SWI swissinfo.ch.
At its annual media conference on Thursday, the Swiss Financial Market Supervisory Authority (FINMA) turned its attention to a trend of investors putting their money into bricks and mortar, with the support of banks.
A stress test carried out by FINMA late last year on 18 banks showed worrying signs of what might happen once rock bottom interest rates start to rise. Such an event would increase the burden on investors paying back loans and likely have a negative impact on the value of the properties they own. This could lead to defaults on loans issued by banks.
FINMA director Mark Branson said he is determined to avoid the type of financial crisis that Switzerland experienced in the 1990s when the housing market collapsed. “The mortgage market is critical to the stability of the Swiss financial centre,” he said. “It is too big to fail.”
Regulatory measures
The volume of mortgage loans in Switzerland has doubled in the last 15 years, and by 45% in the last decade since the global financial crisis, FINMA said. At the same time, 70,000 homes stood empty in mid-2018, realising no rental income. Branson said this represented a “ghost town” the size of the Swiss capital Bern, which “greatly increases the risk of price corrections and loan defaults.”
Branson invited banks to toughen up their self-regulatory measures in relation to the buy-to-let market. “The alternative would be to raise capital requirements for investment property,” he warned.
One person consumes 4.8 megawatt hours of electricity
This content was published on
On average, the Swiss consume 4.8 megawatt hours of electricity per year. According to Velobiz.de, this is roughly equivalent to the amount generated by all 176 cyclists in the Tour de France during the entire race.
Outgoing ICRC chief in Ukraine defends neutrality amid war
This content was published on
Swiss national Jürg Eglin, outgoing head of the International Committee of the Red Cross in Ukraine, reflects on his tenure.
Green party leader criticises government’s neo-liberal policy
This content was published on
The Green Party delegates' meeting opened on Saturday morning in Vicques (JU) with a speech by party president Lisa Mazzone. Mazzone took particular aim at the Federal Council's policy towards the United States.
Working on Sundays is detrimental to well-being, says Swiss study
This content was published on
A study by the University of Bern shows that working on Sundays is detrimental to well-being and particularly affects women.
Safra Sarasin private bank and former asset manager sentenced
This content was published on
The Office of the Attorney General of Switzerland has fined private bank J. Safra Sarasin CHF3.5 million for aggravated money laundering. A former bank employee received a six-month suspended prison sentence.
JPMorgan to pay CHF270 million to settle 1MDB claims
This content was published on
JPMorgan Chase has agreed to pay CHF270 million to the Malaysian government to settle all issues related to its role in the 1MDB financial scandal.
Famine confirmed in Gaza for first time, says UN-backed report
This content was published on
Famine has been declared in a northern part of the Gaza Strip, according to the Integrated Food Security Phase Classification (IPC) system.
Zurich Airport ground handling staff to strike on Friday
This content was published on
Ground handling staff at Zurich Airport have announced a strike for Friday afternoon. According to a union, 200 jobs are at risk.
This content was published on
Philippe Lazzarini will step down as head of the United Nations Relief and Works Agency for Palestinian Refugees (UNRWA) at the end of his term in March, he announced on Thursday.
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.
Read more
More
Swiss homeowners face tighter mortgage rules
This content was published on
Despite a tepid economy, the rock-bottom rates continue to pump Swiss property prices higher, a development that is worrying financial regulators seeking to avoid a bubble. In a bid to staunch the flow of credit for real estate, the finance ministry has proposed stiffer capital requirements for Swiss mortgage lenders, following direction given by the…
This content was published on
As of September 30, banks must boost their capital buffers against domestic mortgage loans by another one per cent. This would mean around SFr3 billion ($3.3 billion) extra capital being tied down in the banking system. The government issued the order on the recommendation of the Swiss National Bank (SNB) as property prices in major…
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.