Switzerland's financial watchdog has condemned a tendency for banks to apply internal guidelines for granting mortgage loans that are less stringent than the legal requirements, and even to depart from the solvency criteria. The Swiss Financial Market Supervisory Authority (Finma) has also identified weaknesses in property valuation procedures, such as lower capitalisation rates for valuing investment properties. + Get the most important news from Switzerland in your inbox Pointing out that the principles of self-regulation constitute a minimum standard for supervision, Finma sees potential for improving the regulatory framework in an area that it considers to be one of the greatest risks for Switzerland as a financial centre. To be sustainable, the assessment of debtors' creditworthiness should also take into account potential interest rate fluctuations. The findings are based on observations of the practices of 27 banks and 18 insurers over the past year, according to a press ...
