From part of the problem to part of the solution: evaluating the effectiveness of borrower-based measures in Austria

Marcel Barmeier () and Selin Johanna Scheuerer ()
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Marcel Barmeier: Oesterreichische Nationalbank
Selin Johanna Scheuerer: Oesterreichische Nationalbank

Financial Stability Report, 2024, issue 48, 41-54

Abstract: Evaluating macroprudential policies is key to ensuring that measures are implemented effectively. Borrower-based measures were introduced in Austria in August 2022 via the so- called KIM-V regulation that defines sustainable lending standards for residential real estate (RRE) financing. In our evaluation, we provide evidence on how effective these measures have been so far in addressing systemic risks in Austria’s RRE sector. Based on data for lending standards, we find that the KIM-V has halved the share of new lending with a debt service-to-income ratio (DSTI) above 40%. In addition, by applying estimations in a difference-in-differences setting, we find that the ratio of nonperforming loans (NPLs) of RRE loans has decreased by up to 0.5 percentage points since mid-2022. Our findings support the literature, which shows that borrower-based measures effectively reduce systemic risks in the housing sector.

Keywords: borrower-based measures; KIM-V; financial stability; residential real estate (search for similar items in EconPapers)
JEL-codes: G21 G28 R31 (search for similar items in EconPapers)
Date: 2024
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