National Bank establishes new supervisory expectations for Belgian banks and insurance companies offering mortgage loans

The National Bank of Belgium (NBB), in its capacity as macroprudential supervisor of our country’s financial institutions, has decided to establish new, explicit expectations for banks and insurance companies active in the residential real estate market.

It is the intention that these financial institutions integrate these expectations in their internal risk management. This should incite them to be (more) prudent in issuing mortgage loans.

This initiative follows findings by the NBB, similar to those of the European Systemic Risk Board (ESRB) and the European Central Bank (ECB), that there has been a renewed build-up of vulnerabilities in our country’s real estate market in recent years.

Previously, the NBB imposed macroprudential measures with regard to the capital buffers to be increased by Belgian banks against potential mortgage loan losses.

Given the further deterioration in banks’ credit standards, an additional measure by the NBB is required for the continued protection of our country’s financial system against potential risks or shocks.

Over the next weeks, the NBB will consult Belgian banks and insurance companies on this initiative. The macroprudential measure is intended to be finalised in the coming weeks and should apply as from 2020 onwards.