Germany’s Bundesbank warns over bank loans to hot property market -report

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Facades of apartment buildings with micro apartments are pictured at Mitte district in Berlin

BERLIN (Reuters) – Germany’s Bundesbank is worried about banks lending to overextended buyers in an overheated property market and reserves the right to impose additional curbs, board director Joachim Wuermeling was quoted as saying on Wednesday.

He told the Handelsblatt business daily the issue of residential property loans continued to rise, although buyers were bringing less and less equity with them.

“The growth is taking place in a market that is becoming increasingly vulnerable because of rising property prices,” he said, adding that there was a danger of buyers becoming over-indebted.

Wuermeling said rising interest rates also posed a threat, as banks had promised customers fixed interest rates for 10 years on more than half of all housing loans for private households.

“In the middle of an interest rate turnaround, banks would still have very low-interest loans on their balance sheets for a few years, but would already have to pay higher interest rates for refinancing,” he said.

(Reporting by Emma Thomasson; Editing by Clarence Fernandez)