SNB still sees correction risk in Swiss real estate market

ZURICH, Sept 20 (Reuters) - The Swiss National Bank (SNB) again warned that Swiss mortgage and real estate markets could tumble, pointing to continued increases in banks’ mortgage lending and a rise in housing prices amidst growing vacancies as persistent imbalances.

“Although prices in the residential investment property segment have stabilised, there is the risk of a correction due to strong price increases in recent years and growing vacancy rates,” the central bank said in its monetary policy assessment on Thursday.

“The SNB will continue to monitor developments on the mortgage and real estate markets closely, and will regularly reassess the need for an adjustment of the countercyclical capital buffer.”

Authorities have been cautioning over risks of a property bubble, as a search for yield amidst negative Swiss interest rates has driven investors to build up residential property portfolios and banks to write more loans, which investors may no longer be able to afford when rates rise. (Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields)