Wednesday, November 16, 2016

Risk for financial stability: Abrupt price correction in the real estate market? – NEWS


Wednesday, 16. November 2016

Low interest rates entice people to blame. Price bubbles in the German real estate market? Banks can keep the output pressure? Still, the situation is the estimation of the Bundesbank, not alarming – but that could change quickly.

The Bundesbank, warns that the ongoing Mini-interest risks for financial stability. “In the current macro-economic environment, the risk that market participants underestimate risks, and does not sufficiently take into account that asset prices fall and interest rates can rise,” said the Vice-President of the Central Bank, Claudia Buch, at the presentation of the “financial stability report, 2016″ in Frankfurt.

The German real estate market, the Bundesbank, despite a sharp rise in prices, but yet no dangerous Excesses. “Although the prices of residential property in Germany climbing since the year 2010, there are currently no signs of excessive lending or a weakening of lending standards,” said book. The financial sector to forgive loans, we with a sense of proportion.

However, the low interest rates tempted to make on the other hand, the debt. Buyers should be aware that when interest rates rise, the prices and reviews on the markets would go back to: “financing, which will appear under the current conditions is appropriate, may turn out to be unsustainable,” warned the book. “This search for yield, in turn, can lead to mispricing of asset prices.” As a result, the risk of an abrupt correction in prices””. The real estate Finance is an example of this.

banks and savings banks do with the money, given the extremely low interest rates, the majority of the institutions can cope with the earnings weakness, but according to estimates by the Bundesbank. Especially for banks and life insurers the risks that can emanate from a rise in interest rates.

“The solvency and liquidity of German banks and savings banks is out of the question” said Bundesbank Executive Board member Andreas Dombret. The Central Bank warned against the risks if interest rates should rise again. In order to overcome the long-term earnings weakness, would not provide the institutions, just their business models to the test, but also about mergers, a thinning of the branch network and savings think. The Brussels plans for a common Deposit insurance in Europe, the Bundesbank remains critical. Also, the current compromise proposal from the EU Commission, to pots according to which a European protection system in the national protection should step in, not portable, said Dombret. “As a result, we should stay with the current System of harmonisation of national Deposit guarantee systems, while many open questions are unsolved.” Dombret stressed: “We still have a very, very large differences in the various member countries.” < /p>

Many EU member States other than Germany. until recently, no functioning national System for the protection of the deposits of Bank customers The German banking industry feared that their years of filled pots to be tapped for imbalances in other countries.

More about

In the global regulation of banks, the Bundesbank building after the election of Donald Trump to the US President on the United States as a Partner. “I am firmly convinced that a worldwide harmonised Standards, avoid regulatory Arbitrage, in the sense of all and has many advantages,” said Dombret. “That’s why I’m going to assume that the US will recognise the benefits of a global scheme to continue and not pull back.” In the “Basel Committee” rings overseers from all over the world currently the global rules for the calculation of risks in the balance sheets of credit institutions. Dombret stressed that he was against a postponement of the negotiations. It is the task of the “Basel Committee” to present to the end of the year, a proposal that could be approved. “This task we have to fulfill.”

The construction loans-comparison




No comments:

Post a Comment