MNI BRIEF: SNB Reactivates CCyB As Mortgage Risks Increased

The Swiss National Bank is reactivating the sectoral countercyclical capital buffer (CCyB), it said Wednesday, setting it at 2.5% of risk-weighted exposures secured by residential property in Switzerland. The SNB sees a compliance deadline of Sept 30 on the increased CCyB requirements following the Federal Council's acceptance of the proposal.

The SNB sees many of the reasons for the March 2020 lifting of restrictions as no longer present, with pandemic risk significantly reduced. However, the vulnerabilities on the mortgage and residential real estate markets have increased since the CCyB was deactivated. Both the volume of mortgage lending and prices for residential property have risen more strongly than can be explained by fundamental factors such as rents and income.