The tightening of real estate loans has been in effect since March 2016. As part of these tightening measures, banks and financial institutions have to scrutinize the creditworthiness of their customers, with the result that pensioners or young families hardly receive any construction loans. An initiative by the finance ministers of Hesse and Baden-Württemberg now wants to change this and already submit an application to the Federal Council on Friday.
The origin of the difficulties that are now becoming apparent is the EU housing loan directive. The idea behind this directive is basically a good thing, as it is intended to help avoid possible overindebtedness of consumers.
But well-meant is not always well done. The Banks and Savings Banks Association accuses Federal Justice Minister Heiko Maas of having overshot the target in implementing the EU directive. The Ministry of Justice in turn sees the responsibility of the banks and thinks that in many cases they would interpret the new regulations too strictly and, in the course of this, less solvent borrowers immediately reject them as a precaution.
Disadvantaging certain groups of real estate borrowers
In practice, real estate loans are now rejected more often. Decisive for the rejection can be the age, or also the time limit of the employment, for example, with time soldiers, if the time limit ends before the term of the construction loan. The financing is then classified as unsafe and rejected. In an extreme case, the elderly lady in the home simply does not get any credit in order to be able to adapt her property to suit her age.
Young families can then no longer make their dream of owning their own home in the country come true if there are temporary jobs or if the woman contributes to the family income, which could be lost in the event of a possible pregnancy. The finance ministers of the federal states of Hesse and Baden-Württemberg have become aware of these circumstances, and they see young families and senior citizens in particular as disadvantaged. The state of Bavaria is likely to join the initiative of the two states. An application is to be made to the Federal Council by the end of this week.