Buying a home remains unaffordable for many households. According to calculations published Wednesday by comparison portal durchblicker, an average dual-income couple would have had to spend 53% of their net income in June to repay a loan for a 90 m² newly built apartment in Vienna—well above the 40% debt-service ratio considered sustainable by the Financial Market Authority (FMA). Banks have made little use of the exceptions to this rule.
“With ECB interest rate cuts coming to an end, high property prices remain the key obstacle to affordability,” said durchblicker Managing Director Martin Spona in a press release. However, there has been slight improvement: in the 2024 average, the same household would have had to spend 61% of its income on loan payments.
Criticism of the FMA
Rules for issuing mortgage loans recently became a political issue again. Although the KIM Regulation (Credit Institution Measures Regulation) formally expired at the end of June and is no longer legally binding, the FMA has urged banks to continue following its guidelines in principle.
This prompted criticism from both banks and politicians. On Wednesday, Reinhard Langthaler, Secretary General of the Freedom Party’s business wing, accused the FMA of pursuing an “anti-growth agenda” that obstructs a much-needed recovery in the construction sector.
Austrian National Bank: KIM Regulation Not the Limiting Factor
The KIM Regulation had required a minimum equity contribution of 20%, a maximum debt-service ratio of 40%, and a maximum loan term of 35 years. However, banks were allowed to make exceptions for up to 20% of their loans. Despite criticism of the rules being too strict, banks made little use of that flexibility, according to the Austrian National Bank (OeNB) in its latest financial stability report.
In the second half of 2024, 87% of new loans complied with the KIM criteria across all banks. About 60% of banks used less than half of their permitted exceptions. “Around €600 million of the available exception volume remained unused, showing that the KIM Regulation was not the limiting factor for household lending,” the OeNB concluded.
More Loans With Fixed Interest Rates
Durchblicker advises borrowers to opt for loans with fixed interest rates. Most borrowers are already doing so, according to OeNB data. In April, banks issued €1.577 billion in new loans—88% of which were at fixed rates, and 12% at variable rates. This marks a clear trend: in 2020 and 2021, fixed-rate loans accounted for just over 60% per quarter; since mid-2023, that share has consistently exceeded 75%.
