2023-08-28 14:12:34
In the course of the debate about the ever-increasing interest rate pressure for real estate borrowers with variable interest loans and the recently announced aid measures by the banks, the governor of the Oesterreichische Nationalbank (OeNB), Robert Holzmann, spoke out in favor of increased advice before borrowing. More comprehensive mandatory advice is needed, according to the OeNB boss in the Ö1 lunchtime journal of ORF radio.
A real estate loan is one of the biggest financial decisions in life. However, this cannot be made in a one-hour consultation, as several scenarios have to be thought through. A consultation must therefore last several hours. In an interview with the “Presse” over the weekend, Holzmann had spoken out in favor of more intensive credit advice and mandatory training before taking out a loan.
In order to further reduce the risk associated with a variable-interest housing loan, it could also be considered to always grant a loan with a fixed interest rate for the first five or ten years, Holzmann continued. There are some states that would do it that way. “Austria has probably expected too much from the individuals here – that can be changed, but it is a political decision,” said the governor. In general, variable interest rates are “a form of speculation. It can end well, but it can also end badly.”
Around half of all loans in Austria have variable interest rates. Wifo boss Gabriel Felbermayr sees the reason for the high proportion not primarily in a lack of bank advice or a lack of financial education, but above all in the framework conditions and regulation. In Austria it is relatively easy to get out of a fixed-interest loan, said the Wifo boss in the Ö1-Mittagsjournal. At one percent, for example, the penalty is lower than in Germany.
As a result, fixed-interest loans are not big business for the banks, so they are expensive for customers compared to variable-interest loans. Because the institutes would expect customers to stay in the loan when the variable interest rates are high and switch from the fixed interest rate to a more favorable variable interest rate when the variable interest rates are lower. If the regulation were to be adjusted, the range of fixed-interest loans would become “richer and cheaper,” according to Felbermayr.
With regard to the Credit Institutions Real Estate Financing Measures Ordinance (KIM-VO) and the further easing required by the banks, Felbermayr proposes making the regulation “breathable”. This means that this could move with the economic cycle, i.e. have a sharper effect when the market is overheating and less drastic when it is quieter. Holzmann, on the other hand, rejects a relaxation. “The regulation, as it is, is well thought out.” The demand for a softening now that there are problems is paradoxical.
The OeNB will also take a look at the transparency portal for savings interest announced by Finance Minister Magnus Brunner (ÖVP) last week as soon as it has been commissioned to do so. However, the governor only found out about the plan “from the ORF”, he told Ö1. However, Holzmann does not believe that the platform will be ready by autumn as announced.
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