The governor of the National bank, Jan Smet, thinks the Belgian residential property market is over-evaluated to the tune of 7%. He gave La Libre Belgique an interview on Saturday.
The National bank has a model that evaluates the prices of residential property. Jan Smet says their model shows “a small over-evaluation to the tune of 7%”. “But what happens if an element was to change? If interest rates go up again? If there is another recession? There could be a correction in that case. Our role is to make sure the banks are healthy”, the governor says.
“As a supervisor, we need to make sure institutions don’t take risks because of the current difficult environment, low rates and margins”, Mr Smet explained. This is the reason the National bank “is sounding the alarm on mortgages that are too risky”, the governor said. He says credit is a loss leader and competition is fierce.
He also mentioned the introduction of a measure that introduces extra demands on additional capital and mortgages at the beginning of May. “We didn’t ask banks to stop mortgages, but to be more careful and have a back-up, which would help them soften the blow”, Mr Smet said.