BERNE, Switzerland May 20 The Swiss mortgage
market has become too big to fail, the head of the country's
financial regulator warned on Tuesday, and it is unclear whether
Switzerland's booming property market can manage a "soft
Real estate prices and mortgage lending have surged in
Switzerland in recent years, a by-product of ultra-low interest
rates set by the Swiss central bank to lower the appeal of the
franc. That has fuelled concern a housing bubble is building, as
mortgages grow faster than the economy.
It was still too early to say just how serious a housing
slowdown would be for the country's economy, Finma Chief
Executive Mark Branson said at the Swiss International Finance
Forum in Berne.
"The mortgage market is growing considerably faster than GDP
is growing," Branson said. "This growth has stabilised but has
not receded yet, so we cannot really be sure there will be a
soft landing in the real estate market."
But the Finma boss also said Switzerland's well-capitalised
banking system was in a better position to weather a downturn
and absorb losses than it was 20 years ago.
The size of Switzerland's mortgage market rivals the balance
sheets of the country's two biggest banks, UBS and
Credit Suisse, Branson said. As a result, the market
is now systemically important to Switzerland's economy.
"When we say these two banks are too big to fail, then
actually the mortgage market is also too big to fail in
Switzerland," Branson said.
($1 = 0.8916 Swiss Francs)
(Reporting by Joshua Franklin; Editing by Larry King)