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Mortgage and real estate market: developments pose risks to financial stability

At the Reichmuth & Co Lecture No. 16, Dr. Fritz Zurbrügg, Vice Chairman of the Governing Board of the Swiss National Bank, spoke on possible risks and vulnerabilities in the mortgage and real estate market.

Dr. Fritz Zurbrügg’s lecture at the University of Lucerne shed light on the signs of unsustainable mortgage lending and the risk of a price correction. These developments pose risks to financial stability that need to be addressed at an early stage.

Fritz Zurbrügg has been a member of the Governing Board of the Swiss National Bank since the beginning of August 2012 and was Head of Department III (Financial Markets, Banking Operations and IT) until the end of June 2015. As of July 1, 2015, the Federal Council elected him Vice Chairman of the Governing Board, whereupon he took over as Head of the II Department (Financial Stability, Cash, Finance and Risks) in Berne. From 1998 to 2006, he served as Senior Advisor and Executive Director in the Swiss Office at the IMF in Washington. In April 2010, the Federal Council appointed him Director of the Federal Finance Administration. Fritz Zurbrügg studied economics at the University of Bern, graduating in 1985 with a Lic.rer. pol. degree and receiving his Dr. rer. pol. in 1989. In 2012, he received an honorary doctorate from the University of Lucerne.

The sharp increase in mortgage lending and real estate prices in Switzerland over the past 15 years have attracted the interest of the Swiss National Bank (SNB). The SNB has a responsibility to safeguard financial stability and therefore closely monitors developments in this sector. As real estate and mortgage markets play a crucial role for the banking sector and the economy as a whole, distortions in these markets can trigger chain reactions that negatively affect both the banking system and the national economy.

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