Residential property in Frankfurt am Main

Better data to monitor risks arising from mortgages

The residential real estate market is crucially important for financial stability. Indeed, housing loans account for just under half of German banks’ balance sheet credit exposures to domestic households and enterprises, while also representing around 70% of total debt in the household sector.

Housing market crises in other countries have shown that risks to financial stability are mainly likely to develop in the housing market if a strong rise in house prices is accompanied by excessive growth in lending and an easing of credit standards. In Germany, however, there is still a lack of data on credit standards for new housing loans. Without these data, risks to financial stability emerging in the housing market may be detected too late.

Germany is behind its peers in terms of data availability in this area. This situation prompted the German Financial Stability Committee (FSC) and international bodies (ESRB, IMF, FSB) to repeatedly call for improvements to be made to the body of data.

The Bundesbank is now aiming to close these data gaps based on the Federal Ministry of Finance’s statutory order (Finanzstabilitätsdatenerhebungsverordnung – FinStabDEV) that entered into force on 3 February 2021. The data, which will now be collected in a regular and standardised manner for new housing loans, can help prudential supervisors detect the build-up of risks in good time and respond appropriately. Should any instruments be deployed, the data will furthermore be used to ensure that action is targeted and to measure its costs and benefits.