What exactly will change?
When granting a mortgage loan, banks have to work with an objective assessment report. This is the result of new guidance from the European Banking Supervision Agency (EBA). It has been in effect since 1 July. The National Bank has given Belgian banks an additional six months to implement the measure, given the efforts they have already made during the Corona crisis. Thus, the new directive will be implemented in practice from 2022.
By the way, it is not uncommon to ask for an estimate of a credit profile. This is already happening regularly, Veblefen says, but with the introduction of the EBA directive, this will have to be done for all files.
Why is the scale offered?
With this action, the EBA wants to monitor the financial soundness of the banks. Especially at times when there is a file Real estate prices are strong to raise. This measure is intended to prevent banks from lending very large sums that they may not be able to recover if the customer is no longer able to repay their loan.
The measure should also ensure that the rise in real estate prices remains under control and that the real estate market does not overheat. Depending on the estimate, the bank will be able to request a further private contribution if it turns out that the purchase price will exceed the fair value of the property. This can lower real estate prices. However, experts are not convinced.
When appraising a home, you must not forget that the real estate agent does not determine the value of the home. This is what the market does.
When evaluating a home, you must not forget that the real estate agent does not determine the value of the home. This is what the market does. Selling real estate is just a matter of supply and demand, and you can’t ignore it, says Johan Kriegsmann, CEO of ERA Real Estate Network.
How will it be assessed?
According to EBA guidelines, estimation should be done by a recognized internal or external estimator, possibly supported by advanced statistical models. It is clear how the banks will regulate this concretely. It looks like “we’re working on it”.
The estimate is not free. Now you pay an average of 250-350 euros for it, but there are also tops of up to 600 euros. The real estate agent asks: “What if the loan is not granted?”.
It is not clear whether the action means the credit profile will last longer because an estimate must be made. “This is definitely not the intention,” apparently in a bank.
What will be the consequences for the real estate market?
Some experts fear that it will become difficult for young families to buy their own home. It seems that “in the price range of 200,000 to 400,000 euros, the competition is huge and young real estate investors will outperform”. “Those with sufficient financial resources will always be able to bid higher than those with limited resources,” says Frédéric Vandenhende of real estate investment platform Investr. “And those who can bid on real estate without a precondition for a loan always have an advantage over those who do so with a pending condition.”
If you now want to buy a home whose value, after estimation, turns out to be less than the purchase price, you have to finance the difference yourself.
“This is really the death knell for young couples with very little personal input,” says Krijgsman. Banks are already getting stricter when granting a home loan. Since last year, anyone who borrows a family home can in principle borrow a maximum of 90 percent of the purchase amount. “Anyone who now wants to buy a house whose value, after appraisal, turns out to be less than the purchase price, has to finance the difference himself.”
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