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Geneva – In a country proud of economic stability, expressions such as "Too big to go bankrupt" can attract attention in Switzerland, especially when they are pronounced by the head of financial supervision.
However, the warning of Mark Branson, CEO of the Swiss market surveillance company (Finma), launched this week on the mortgage market in the country, has not come out of nowhere.
In recent months, the health of the Swiss real estate sector has been marked by several red flags, while the prices of rental rental properties have continued to increase due to stagnant rents and rising vacancy rates.
In his annual media address, Branson outlined his concerns and called for action.
"The mortgage market is essential to the stability of the Swiss financial center. It's too big to fail, "he said. He also pointed out that mortgage crises have a proven history of impacting the economies they infect.
Finma's usual practice of intervening to control individual institutions that take too much risk "is not enough to counter the overheating trends we are currently seeing," said Branson. "As a result, we must act now."
Finma's call comes a few days after the IMF issued its own warning regarding the Swiss financial sector's exposure to mortgage lending.
"About 85 percent of the banks' national holdings are concentrated in mortgages," the IMF said in a statement after an official visit to the wealthy alpine nation.
In addition to banks, pension funds and Swiss insurance companies were also "highly exposed to the real estate sector".
"Shocks on real estate prices could resonate across the economy," the IMF said.
Rental properties in Switzerland have long been attractive investments, with prices for these badets reaching unprecedented heights. Still low interest rates have fueled the buying frenzy.
However, Finma said he worried about market imbalances due to soaring prices and the construction of new units, despite government figures that a record 70,000 residential units were vacant at the time. mid-2018.
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