Responsible lending must remain a priority

15 February 2019 - 3 min Reading time

Today the National Bank of Belgium published and explained its annual report. The Bank judges that the share of risky loans in new mortgage loans is still too high. Febelfin acknowledges the NBB's determination. This is and remains a point of attention, Febelfin takes the NBB's warning seriously.


After all, it is not the first time that the National Bank has warned about this. In this regard, macro-prudential measures for the residential real estate market were introduced by the NBB last year. This means that banks must maintain a higher buffer if they have a higher Loan-To-Value in the totality of their loan portfolio.

Credit versus value of the property

Despite this measure and the previous warnings, Febelfin, together with the NBB, also notes that the value of the loan compared to that of the collateral (LTV) continues to increase for new loans. This can mainly be explained by the competitive market in which the banks find themselves.

The sector realizes that responsible lending must remain the absolute starting point. Febelfin is on the same page as the regulator: lenders must exercise the necessary caution to, on the one hand, prevent individual borrowers from taking out loans that are too large and, on the other hand, to safeguard financial stability in the long term.

If the NBB deems it desirable, it should play its role as supervisor and, in consultation with politicians, examine whether new measures can be implemented. This is to avoid problems in the future.

After all, there are few problems today, our country has a healthy mortgage credit policy. Defaults are limited to less than 1% of all mortgage loans. As shown in the report of the Central Office for Credit to Private Individuals, defaults have remained very low in Belgium for years, and have fallen even further in recent years.

In addition, we are characterized by a mortgage credit market in which the vast majority opt for fixed interest rates, and consumers are protected by legislation so that variable interest rates can double at most. This means that the risk for the consumer is much more limited in the event of possible interest rate increases in the future.

When granting credit, repayment capacity remains the most important criterion. The bank will examine each file thoroughly on a case-by-case basis, analyze the repayment capacity of the borrowers and, in many cases, require their own contribution. Responsible lending is of enormous importance and this must be maintained in the future. A more optimal policy framework can help with this, and Febelfin wants to provide maximum support for this.