Swiss housing market faces correction risk

Switzerland's financial market regulator warned on Saturday of growing risks in the housing market, saying banks were stretching mortgage lending criteria as property prices continue to climb.

"The risk in the mortgage market is high, prices continue to rise and the danger of a correction is correspondingly high," Financial Market Supervisory Authority (Finma) head Stefan Walter told the Swiss news outlet Blick in an interview.

"We have found that the scope for granting mortgages is being exploited excessively by various banks," he said.

Internal criteria are either too loose or a high proportion of financing goes beyond some banks' own affordability rules, he stated.

He told Blick that some banks were relaxing their internal lending criteria on between 25% and 40% of mortgage loans as a result of intense competition. Finma intervenes when it sees exceptions of that level, he added.