44th meeting of the Financial Market Stability Board

The 44th meeting of Austria’s Financial Market Stability Board (FMSB) took place on February 26, 2025. The main topics discussed were the countercyclical capital buffer and sustainable lending standards for residential real estate loans.

Residential real estate financing

The FMSB discussed sustainable standards for real estate loans. Even though the regulation for sustainable lending standards for residential real estate financing (KIM-V) is set to expire, sustainable lending remains essential to financial stability. The FMSB has therefore approved/supports the following accompanying measures:

  • Guideline on lending standards: The FMSB emphasizes that the loan-to-collateral ratio should not exceed 90%, the debt service-to-income ratio should not exceed 40% and the maximum maturity should not exceed 35 years. The proportion of loans not meeting these criteria should not exceed 20% of new lending in any given quarter.
  • Increased reporting frequency: To allow for more timely monitoring of lending standards, the Financial Market Authority (FMA) will change the VERA-H reporting frequency to require quarterly data.
  • Additional information: The Oesterreichische Nationalbank (OeNB) will regularly publish details of trends in lending.
  • Capital-based measures: At its upcoming meetings, the FMSB will, in collaboration with the FMA and the OeNB, evaluate capital-based measures.

Countercyclical capital buffer

The FMSB recommends that the FMA maintain the countercyclical capital buffer at its current rate of 0% of risk-weighted assets. At –14 percentage points, the credit-to-GDP gap, i.e. the difference between the credit-to-GDP ratio and its trend, remained below the critical threshold of 2 percentage points in the third quarter of 2024.

At its 45th meeting, the FMSB will also discuss the introduction of a new method developed by the OeNB to assess cyclical risks. This method is to take into account the relationship between activity in the real economy and lending. Consistent with a recommendation by the European Systemic Risk Board (ESRB), it is to be supplemented by indicators of systemic risk during periods of excessive credit growth. In addition, real estate market trends are to play a greater role in the assessment of cyclical risks.

2024 annual report

In 2024, the work of the FMSB focused on identifying and addressing systemic risks arising from commercial real estate financing, evaluating and monitoring measures to limit systemic risks from residential real estate financing for private individuals, evaluating the buffer for other systemically important institutions (O-SII buffer) and the systemic risk buffer as well as setting the countercyclical capital buffer on a quarterly basis. The annual report will be published on the FMSB website in April 2025.