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

Author

Listed:
  • Marcel Barmeier

    (Oesterreichische Nationalbank)

  • Selin Johanna Scheuerer

    (Oesterreichische Nationalbank)

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.

Suggested Citation

  • Marcel Barmeier & Selin Johanna Scheuerer, 2024. "From part of the problem to part of the solution: evaluating the effectiveness of borrower-based measures in Austria," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 48, pages 41-54.
    • Handle: RePEc:onb:oenbfs:y:2024:i:48:b:3
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    References listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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