Swiss Government Tells Bank to Slow Mortgages to Dampen Housing Bubble

The Swiss government is taking steps to try to stop a housing market boom running out of control, announcing on Wednesday it will demand banks hold additional capital to dampen mortgage activity.

Real estate prices and mortgage lending have risen strongly in Switzerland in recent years, a by-product of the ultra-low interest rates set by the central bank to lessen the appeal of the safe-haven Swiss franc and prevent a recession.

The government action comes as the result of a request from the Swiss National Bank, which has repeatedly expressed concern about overheating house prices.

“These imbalances intensified further during the second half of 2012, reaching levels that pose a risk to the stability of the banking sector, and hence to the Swiss economy,” the SNB said in a statement.

via CNBC

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