The EU Directive on Residential Property Loans

As of spring 2016 banks granting residential property loans have had to comply with new regulations. These new rules stem from the European Union’s desire to significantly reduce both risks for users and for the financial system as a whole. Their implementation by German lawmakers, however, leaves several questions open with regard to the upgraded credit check. Several banks have apparently reacted to the potential legal implications of their actions by restricting access to credit. At the same time, it remains difficult to assess how great the negative impact of the new regulations actually is, and whether this isn’t just a temporary effect. While the banks are divided as to the need for change in view of the new regulation, the federal government has now drafted a bill that should reduce existing legal uncertainty.