Assessing real estate risks and vulnerabilities: Hidden cracks in the financial system?

Tobias Berg and Rainer Haselmann

No 111, SAFE White Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: The European financial system faces significant risks from excessive bank lending to the real estate sector. Historical trends show a strong link between real estate credit booms and banking crises. Current data indicate that real estate loans constitute a substantial share of banks' corporate loan portfolios, with varying risk levels across countries. Key drivers include expansionary ECB policies and regulatory incentives favouring mortgage lending. Strengthening oversight, improving data collection, and adjusting regulations are essential for financial stability. This document was provided/prepared by the Economic Governance and EMU Scrutiny Unit at the request of the ECON Committee.

Keywords: Real Estate Landing; Banking Crisis; Financial Stability (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewh:319064

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