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

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  • Berg, Tobias
  • Haselmann, Rainer

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.

Suggested Citation

  • Berg, Tobias & Haselmann, Rainer, 2025. "Assessing real estate risks and vulnerabilities: Hidden cracks in the financial system?," SAFE White Paper Series 111, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewh:319064
    as

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    References listed on IDEAS

    as
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