The World Savings and Retail Banking Institute published a joint statement on the interaction between housing affordability and European financial regulation, warning that tighter financial conditions and the evolving prudential framework are constraining access to mortgage credit and banks’ lending capacity. The statement links Europe’s housing affordability pressures to a persistent supply-demand gap, weaker construction activity, higher land and building costs, demographic pressures and regional disparities. It argues that central banks’ higher interest rate policy and broader borrowing-cost increases have significantly constrained mortgage credit, with particular impact on vulnerable and first-time buyers, and that Basel rule transposition combined with divergent national practices is adding strain to lending capacity at a time when investment in housing supply and renovation is needed. It points to a European Commission report expected in 2026 on competitiveness and the banking regulatory framework as an opportunity to assess the concrete impact of regulation, and frames the European Affordable Housing Plan as a cross-member-state initiative whose effectiveness will depend on EU policies, including financial regulation, supporting affordability objectives.
World Savings and Retail Banking Institute 2026-02-25
World Savings and Retail Banking Institute issues joint statement warning EU prudential rules are constraining mortgage lending
The World Savings and Retail Banking Institute's statement highlights how tighter financial conditions and evolving prudential frameworks limit mortgage credit access and banks' lending in Europe. Housing affordability pressures stem from a supply-demand gap, higher costs, demographic factors, and central banks' interest rate policies. The statement suggests the European Commission's upcoming competitiveness report as an opportunity to evaluate regulatory impacts and emphasizes EU policies' role in supporting the European Affordable Housing Plan.