Macroprudential decision: FIN-FSA decides there will be no increase to countercyclical capital buffer requirement applicable to banks, nor restriction to maximum loan-to-value ratio for residential mortgage loans
The Board of the Financial Supervisory Authority (FIN-FSA) has decided not to increase the countercyclical capital buffer requirement (variable capital add-on) applicable to banks; the requirement will remain at zero. Neither will the maximum loan-to-value ratio for residential mortgage loans be reduced, or the collateral to be taken into account restricted.Preparations will continue for setting, by 1 July 2017, a minimum level of 10% for the average risk weight on residential mortgage loans of credit institutions that have adopted the Internal Ratings Based Approach.
The countercyclical capital buffer requirement (variable capital add-on) referred to in the Credit Institutions Act (chapter 10, section 4) will not be increased, and it will thus remain at the current level of 0.0%. The value of the credit-to-GDP gap, used as the primary justification for the assessment, would give a reference value of 1.0% for the countercyclical capital buffer requirement, but this stems from growth in internal liabilities of non-financial corporate groups.
Supplementary risk indicators are not signalling such an increase in financial system vulnerabilities as would necessitate a higher countercyclical capital buffer requirement.
The Board of the FIN-FSA judged that there is no need to tighten the maximum loan-to-value ratio for residential mortgage loans from its basic level, as no signs of an exceptional increase in risks to financial stability have emerged. The maximum loan-to-value ratio will remain at 90% (for purchase of a first home, 95%) of the current value of collateral.
The Board of the FIN-FSA made its decision upon proposal by the Director General and after consultation with the Bank of Finland, the Ministry of Finance and the Ministry of Social Affairs and Health. In accordance with the regulations governing the Single Supervisory Mechanism, the European Central Bank was also consulted in respect of the decision.
For further information, please contact
Pentti Hakkarainen, Chairman of the Board of the Financial Supervisory Authority, tel. +358 10 831 2002.
- Board decision (pdf)
- Proposal by the Director General of the FIN-FSA circulated for comment (pdf, in Finnish)
- Opinions (in Finnish)
- Bank of Finland (pdf)
- Ministry of Finance (pdf)
- Ministry of Social Affairs and Health (pdf)