The End of the KIM Regulation:
A New Chapter for Property Buyers in Austria
With the upcoming expiry of the KIM Regulation at the end of June 2025, the Austrian real estate market is on the brink of a significant transformation. Introduced in 2022, the regulation aimed to enhance financial stability and curb excessive real estate lending.
Its removal will bring about changes in mortgage lending and property financing. Both borrowers and banks will need to adapt to these new conditions. In this article, we outline what the end of the KIM Regulation means for loan approvals, interest rates, and repayment structures.
What Is the KIM Regulation?
The “Kreditinstitute-Immobilienfinanzierungsmaßnahmen-Verordnung” (KIM Regulation) was introduced to establish clear lending standards and prevent risks to financial market stability. Among its key provisions were measures designed to protect borrowers from over-indebtedness while safeguarding the integrity of the broader financial system.
The KIM Regulation included the following requirements:
- Loan-to-value ratio: Borrowers could typically receive loans for a maximum of 90% of the property’s value.
- Equity requirement: At least 20% of the purchase price, including ancillary costs, had to be covered by the buyer’s own capital.
- Debt-service ratio: Monthly repayments were limited to a maximum of 40% of net household income.
- Maximum loan term: Mortgages had to be repaid in full within 35 years.
These guidelines were intended to ensure stable financing structures and to prevent overheating in the property market. The decision not to extend the regulation reflects the assessment that Austria’s economic conditions and real estate market stability have improved. It has also been acknowledged that the regulation posed a considerable barrier for many potential buyers, limiting their access to the market.
What the End of the KIM Regulation Means for Buyers
The phase-out of the KIM Regulation opens up a range of new opportunities for property buyers:
- Greater financing flexibility: Without these strict requirements, buyers can benefit from more adaptable financing options.
- Easier market entry: First-time buyers and young families, in particular, will find it easier to enter the property market, as no legally mandated equity quotas will apply.
- Wider range of financing products: The easing of regulations may result in a broader selection of loan offers. This could intensify competition among lenders and lead to more attractive terms for buyers.
Impact on Interest Rates and Repayment Plans
The new regulatory environment is likely to have a notable effect on interest rates and repayment conditions. Banks may increase interest rates to compensate for higher risk margins, and longer loan terms could become more common. Borrowers should reassess their financing strategies and make adjustments accordingly.
As a result, many property buyers are now exploring alternatives to traditional mortgages. Government subsidy programs often offer attractive rates and grants.
Experts anticipate that the removal of strict lending requirements will stimulate demand for real estate. With easier access to credit, more potential buyers will be able to pursue the purchase of their dream homes. This, in turn, could influence property prices. After a period of stagnation, increased demand might lead to a slight upward trend in prices.
Your Trusted Partner: BAMBERGER IMMOBILIEN
In this evolving landscape, it’s more important than ever to have a reliable partner by your side. At BAMBERGER IMMOBILIEN, we are here to support you with an extensive network of partners in Salzburg and the surrounding region. Our experienced team understands the challenges of real estate financing and offers valuable insights and professional advice.
Contact us today to schedule a personal consultation!