A subtle brake

By Camille FratiLex KlerenGilles Kayser Switch to French for original article

In December 2020, the CSSF asked banks to tighten the screws on their home loans to reduce the risk of overindebtedness of their clients. One year later, the measure has not had a major impact on the market - but it may have been a boost for first-time buyers.

The announcement caused much discussion last year: the Commission de surveillance du secteur financier (CSSF) imposed on banks and insurance companies to deny access to real estate credit to buyers who could not meet a certain percentage of equity. In banking jargon, this is also called equity capital. Regulation 20–08 of December 3, 2020, setting out conditions for the granting of loans for residential property located in Luxembourg provides that "a maximum limit of 80 percent is set for the ratio between the sum of all loans or tranches of loans guaranteed by the borrower concerning a residential property at the time of the loan arrangement and the value of the property at that time".

This regulation was blown up by the Systemic Risk Committee (SRC) to the CSSF. A committee created in 2015 and composed of the country's highest authorities in the field of finance: the Minister of Finance, the Director General of the Luxembourg Central Bank, the Director General of the CSSF and the Director of the Commissariat aux assurances (CAA). Its mission is to ensure the stability of the Luxembourg financial system and to initiate the necessary measures to prevent its collapse in the event of a major crisis.

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Opgepikt - Welt im Nebel