How the federal government wants to restrict lending and why this annoys banks

How the federal government wants to restrict lending and why this annoys banks

According to a report by www.mdr.de, the federal government is in the process of tightening the rules for lending. This particularly applies to the granting of real estate loans. German banks are currently checking borrowers thoroughly with regard to their creditworthiness. Nevertheless, the federal government plans to better protect consumers from taking out loans that they cannot repay. Measures should also be taken to protect banks from loan defaults.

The details of the law have not yet been finalized, but regulators will be given more powers to intervene when banks and savings banks grant loans to customers who are at high risk of default. This could be the case, for example, if customers earn too little or their repayment options exceed the loan. Banks have responded with criticism because they believe this could lead to difficulties for low- and middle-income people to acquire property.

These new regulations could actually have an impact on the real estate market and the financial industry. The stricter lending requirements could mean that people with lower incomes in particular have difficulty getting a loan. Under certain circumstances, property prices could fall because fewer potential buyers would be able to finance a property. At the same time, banks could become more cautious when granting loans due to increased risks and grant fewer loans.

In the long term, however, cautious lending and stable real estate prices could also help prevent real estate bubbles and ensure the stability of the financial markets. It remains to be seen how the planned measures will affect the real estate market and the financial sector in Germany.