Banks are scrutinizing home loans more strictly

Frankfurt The dream of owning your own home is becoming increasingly difficult to achieve. There is another problem in addition to the persistently high real estate prices: the banks and savings banks in Germany are examining mortgage lending more strictly than they were at the beginning of this year. “The banks have become more risk-aware when it comes to real estate loans,” says Raimund Röseler, the chief bank supervisor at the Bafin financial supervisory authority.

A survey conducted by the Handelsblatt among seven major banks in Germany confirms the finding: Most financial institutions now apply stricter standards to loan applications for building or buying a home – and tend to turn down financing requests.

The Bundesbank, which regularly examines the lending behavior of institutes, states that banks tightened their credit guidelines for private home construction loans in the second quarter more than ever since the introduction of their “Bank Lending Survey”.

The banks gave the poorer prospects on the housing market and the lower creditworthiness of borrowers as the main reasons for this. This is exactly what the banks’ responses to the Handelsblatt survey reflect.