1 Min Read
ZURICH, Jan 23 (Reuters) - The Swiss government is raising the level of capital banks must hold against their mortgage activity, tightening controls on lenders after the previous requirement failed to dampen Switzerland's housing market boom.
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.
Swiss banks will have to hold 2 percent extra capital against mortgage risk-weighted assets from June 30, 2014, up from the 1 percent they were required to hold by the end of September last year.
The government action comes as the result of a request from the Swiss National Bank, which has repeatedly expressed concern about overheating house prices. (Reporting by Caroline Copley)