Austria’s strict home loan rules were expected to ease in 2025 with the expiration of the KIM Regulation, but Austrian media reported that this no longer appears to be the case.
While the regulation will officially expire in June 2025, the Financial Market Stability Board (FMSG) has announced that banks should continue to follow the same lending guidelines to maintain financial stability.
This means that homebuyers hoping for easier access to mortgages will still face significant borrowing restrictions, as reported by Der Standard.
What is the KIM Regulation, and why was it introduced?
The KIM Regulation (Credit Institutions Real Estate Financing Measures Ordinance) was introduced in August 2022 to prevent risky lending in Austria’s real estate market.
READ ALSO: Will Austria’s property market become more buyer-friendly now?
It imposed strict rules on mortgage loans, requiring buyers to have at least 20 percent equity, limiting loan terms to 35 years, and capping monthly repayments at 40 percent of net disposable income.
While the regulation reduced financial risk, it also made it much harder for many people in Austria —especially young families and middle-income earners— to secure home loans.
According to Die Presse, property transactions slowed significantly. Only 16,000 apartments were sold in the first half of 2024 compared to 26,000 in the same period in 2022.
Will anything change after June 2025?
Even though the KIM Regulation will officially expire, the FMSG has recommended that banks continue to apply the same lending standards.
The board stated that "sustainable lending is essential for the stability of the financial market" and that the previous requirements should remain in place.
Banks are expected to continue following key rules, including a loan-to-value ratio that does not exceed 90 percent, a debt-service-to-income ratio capped at 40 percent, and a maximum loan term of 35 years.
Loans not meeting these criteria should not account for more than 20 percent of new loans per quarter.
Read also: Can I get a mortgage in Austria as a foreigner?
The Austrian National Bank (OeNB) will continue monitoring real estate lending trends, and the Financial Market Authority (FMA) will oversee banks to ensure responsible lending practices are followed, as reported by Der Standard.
Why are regulators keeping strict lending rules?
Even with improvements in the housing market, regulators are still wary of financial risks.
Housing loans in Austria have grown sixfold over the past 25 years, now totaling €130 billion—dramatically reshaping banks' balance sheets and risk profiles.
The FMA has warned that without lending restrictions, Austria could face systemic risks similar to those seen in past financial crises.
Helmut Ettl, co-head of the FMA, stated in December that "those who can't afford it should still not get a loan." Regulators are concerned that banks could return to risky lending practices that might destabilise the market without oversight.
How will this affect homebuyers?
This announcement is disappointing for buyers hoping that mortgage restrictions would ease in 2025.
Although property prices in Austria have stabilised, getting a mortgage will still be tough under these rules. The real estate market has already slowed down, and with banks sticking to the same lending criteria, that’s unlikely to change anytime soon.
Some industry experts believe that individual banks may eventually offer more flexible loan options. Without the legal requirement of the KIM Regulation, banks will have some freedom to adjust their lending policies within regulatory limits.
However, any major changes are unlikely in the near future.
READ ALSO: Property buying rules for international residents in Vienna
What happens next?
The Financial Market Authority will begin discussions with banks to ensure they continue applying these lending guidelines.
Regulators will monitor the impact on Austria’s housing market and assess whether further interventions are needed.
For now, homebuyers should not expect any major changes to mortgage conditions, even after the KIM Regulation expires in June 2025. Those hoping for an easier path to homeownership may need to wait longer or explore alternative financing options.
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