Some households contribute only a small amount of equity when buying property financed by a loan. If they then default on the loan, lenders may incur losses. Should the problem affect a large number of lenders, this could potentially jeopardise financial stability. Minimum requirements for the own funds households need to provide can limit losses that may arise. However, this would mean that some households can no longer obtain loans in the desired amount. A Bundesbank study shows that a large proportion of the households interested in buying which would be affected by this are then willing to buy a cheaper property or to save more in order to buy at a later date. The impact on homeownership is therefore likely to be smaller in the medium than in the short term.

Zweite Abstimmung mit der Kreditwirtschaft zur technischen Spezifikation

The August 2023 edition of the Monthly Report comments on the economic situation in Germany in summer 2023.

Internal risk models play an important role in ensuring capital adequacy at banks. Banking supervisors keep a particularly close eye on them, as banks have some degrees of freedom when it comes to model design. A new study examines the incentives for banks to implement internal risk models, analyses their impact on risk management and explains possible consequences of a new regulatory proposal regarding application of such models.