ZURICH, Feb 6 (Reuters) - The Swiss National Bank is ready to explore alternative methods to cool Switzerland’s overheating property market if current macroprudential measures don’t do the job, its vice-chairman said on Thursday.
Real estate prices and mortgage lending have risen strongly 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 safe-haven franc.
The Swiss government, at the request of the central bank, is already forcing Swiss banks to maintain extra capital against the mortgages they hold. Now the SNB is discussing other options with Swiss finance regulator FINMA.
“We believe the time now is right to explore the possibility of alternative measures,” Jean-Pierre Danthine told an audience at the Finanz und Wirtschaft forum in Zurich.
Danthine said the new measures should focus in particular on aspects of property-market supply and borrower burden. He did not elaborate.
The Swiss government said last month it was raising the level of capital that banks must hold against their mortgage book to 2 percent from 1 percent, after an effort to curb a housing boom failed to restrain the sector enough.
Swiss law allows for this so-called counter-cyclical capital buffer to be increased to up to 2.5 percent.
The SNB cannot easily raise rates; that would clash with its efforts to cap the Swiss franc. The central bank began holding down the franc in 2011 after investors fleeing the euro zone crisis bid the currency up to record levels. (Reporting by Alice Baghdjian; Editing by Larry KIng)