Swiss Regulator Warns on Mortgages Amid Correction Risk: Blick

(Bloomberg) — Some banks in Switzerland are overly lax in approving mortgages at a time when there’s a growing risk of a correction in houses prices, the head of Swiss financial regulator Finma said in an interview with Blick newspaper.

“At many banks, exceptions to internal lending criteria range between 25 and 40%,” Finma Chief Executive Officer Stefan Walter said in the interview. “When we identify this, we warn these institutions that it is neither in the bank’s nor their customers’ interest.”

Competitive pressure at a time of rising home prices is leading banks to give into the “temptation” to ease credit controls, Walter said. He added that the regulator would inform the public if it imposes additional capital buffers on specific banks.

An index of single-family home prices in the country published by the Swiss National Bank is at a record high. Prices have been rising steadily for the past 25 years, following a decade-long downturn in the 1990s.

In September, Switzerland voted to abolish a century-old system of taxing property, a move that will see lower dues for homeowners and potentially boost real estate prices further.

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