The SBA might consider making amendments to its self-regulation for the mortgage market

Swiss authorities, including the main financial regulator, say there is a need to review the self-governed residential property sector, such as for new mortgages at a time of stresses on the market.

“The authorities have expressed a need for action in the residential investment property segment. This is due to their market analyses, their supervisory activities and lastly on the basis of a stress test,” the Swiss Bankers Association said in a statement yesterday.

The SBA is closely collaborating with the authorities in order to gain an in-depth understanding of the analysis. If the conclusion reached by the SBA is the same as that of the authorities, the SBA will consider making amendments to its self-regulation for the mortgage market,” it said.

The SBA said “authorities have expressed a need for action in the residential property market” although the statement was vague as to what that action might be. Loan-to-value ratios are mentioned as one topic up for discussion.

The comments come at a time when Switzerland is already in the throes of overhauling how trusts, funds and other financial entities are regulated by FINMA, the official financial watchdog.

“In a first step, we must now understand the authorities’ assessment of the residential investment property market in detail. Should the need for action be confirmed, we will amend our self-regulation as a precautionary measure”, Philipp Halbherr, a member of the SBA’s executive board.

A working group mandated by the SBA will be responsible for presenting its findings and measures to the board of directors in the second quarter of 2019.

“Amendments to the self-regulation would have a very targeted and effective impact. In contrast to a state regulation, amendments to the self-regulation can be applied in a targeted manner and for as long as the situation requires,” Halbherr said.