Vaduz – Many private households in Liechtenstein have high levels of debt. However, the low vulnerability of deposits and financing help to mitigate risks. These are the findings of the country’s Financial Market Authority in a recent report. It hopes to increase awareness of risks.

Around 1,500 private households in Liechtenstein have debts of over 1 million Swiss francs according to information from a press release by the Financial Market Authority Liechtenstein (FMA) on its recent report on the country’s property and mortgage markets. According to the report, the average household debt is more than double its annual income. According to the press release, this makes Liechtenstein one of the top countries in Europe in this respect.

 

In their report, analysts at the FMA investigate the risks associated with high debt, both for households themselves and for the financial stability of the banking sector of Liechtenstein. The large proportion of households with debt that is too high in relation to their income, as determined by the analysts, indicates “considerable risks and vulnerability in the domestic sector” according to the main findings of the report.

 

However, most of the debts are taken on by households to purchase a home. The analysts at the FMA categorized the vulnerability of the value of the real estate stored in these mortgages as “low to moderate”. The financial vulnerability was estimated by the analysts to be low. They refer to the good capitalization and liquidation figures from banks with regard to this. Additionally, they have observed a fall in mortgage growth despite interest conditions remaining favorable.

 

The analysts highlight the low transparency of the domestic real estate market as a shortcoming. The FMA hopes to promote awareness of possible risks through an improved data situation and open and transparent communication. An excerpt from the presentation by Deputy Prime Minister and Economic Affairs Minister of the Principality of Liechtenstein Daniel Risch on the presentation of the report is quoted in the press release: “We can only make informed and thus ultimately targeted decisions and take appropriate measures if we have all of the necessary information.”

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