NLD DNB confirmed it had started consultation on the extension of the Risk Weighting Scheme for Mortgage Loans 2022, by amending the regulation on CRD/CRR provisions.
On Oct. 21, 2021, the 2022 Risk Weighting Regulations for Mortgage Loans adopted by NLD DNB was published in the gazette and then entered into force from Jan. 1, 2022.
With it NLD DNB determined a minimum floor for the risk weighting of the mortgage loan portfolios of banks internal models, via Capital Requirements Regulation (CRR).
These current arrangement have already been set to remain in effect to Dec. 1, 2022.
However, in light of ongoing overheating in Dutch housing market and the increasing systemic risk posed, NLD DNB believes this does not reflect current systemic risks.
It therefore proposes extending the current scheme for two years, to Dec. 1, 2024.
As part of the process, NLD DNB will coordinate the decision to extend the scheme with the relevant European authorities, namely EU ESRB, EU EBA, as well as the ECB.
Next Steps
NLD DNB will publish a general feedback statement after processing the responses, and the final version of the regulations will be published in the government gazette.
Effectiveness
Reactions to the consultation can be sent to NLD DNB via email until Aug. 5, 2022.
Oct. 10, 2022 Scheme Extended
On Oct. 10, 2022, NLD DNB said consultation on amending regulation on CRD/CRR provisions re risk weighting of mortgage loans, did not lead to changes to regulations.
Risk Weighting Scheme for Mortgage Loans 2022 remains in effect until Dec. 1, 2022.
Due to systemic risk posed by overheating of Dutch housing market, and taking into account that risk weights used by banks for mortgage loans do not sufficiently reflect systemic risk in housing market, DNB has decided to extend the scheme by two years.
This extension option is provided for in Article 458, CRD/CRR.
DNB will also have the consulted regulations published in the official gazette.
Thus minimum risk weight floor for mortgage loan portfolios extended to Dec. 1, 2024.
Oct. 17, 2022 Published in OG
On Oct. 17, 2022, NLD GVT issued in official gazette reg amending reg on specific provisions CRD/CRR 2019 in connection with the extension of a minimum floor for the risk weighting of loans to private individuals secured by mortgages on immovable property in NLD (Regulation for extension of risk weighting mortgage loans 2022).
The regulation will come into effect on Dec. 1, 2022 and will expire on Dec. 1, 2024.
Document dated Oct. 17, 2022, was added on Oct. 24, 2022, due to request by client.
