Swiss central bank warns of possible correction

Vice-Chairman of the Swiss National Bank Fritz Zurbruegg (Getty)

The Swiss national bank has warned of a correction in the country’s real estate market as house prices continue to rise.

Schweizerische Nationalbank vice chairman Fritz Zurbruegg said in a speech Tuesday that new mortgage borrowers may not be able to pay off their loans if borrowing costs rise, according to Bloomberg. Low interest rates could make the situation worse by encouraging borrowing and subprime lending, he said.

Zurbruegg cited signs of “unsustainable mortgages” as well as “price correction risks” and added: “The likely continuation of the current recovery in the mortgage and real estate markets means that the risks to financial stability should remain under the projectors. . “

According to some estimates, Swiss house prices are overvalued by 30% and UBS Group AG has also warned of a bubble. New Zealand, Canada, Sweden and the United States are also at risk.

The Swiss real estate market demands “vigilance” from the authorities, said Zurbruegg.

[Bloomberg] – Denis lynch

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