Purchase price is not lending value
Property value, CRR III and EBA LOM explained. Why banks have valued more conservatively since 2025 — and what that means for your financing.
Why purchase price does not equal lending value
The purchase price is what you pay. The lending value or property value is what the bank applies as security. The two often differ considerably — and that has been increasingly the case since 2026.
With the EU banking regulation CRR III and the EBA Loan Origination & Monitoring Guidelines (EBA LOM), tightening requirements for valuation were enforced in 2025. Banks today have to value considerably more conservatively than back in 2020.
Property value vs. market value vs. lending value
- Market value: the realistic open-market value at the valuation date — corresponds to the current purchase price
- Lending value: the long-term sustainable value — typically 10–20% below market value
- Property value (CRR III): since 2025 a conservative valuation approach, often 5–15% below the lending value in high-price phases
What CRR III changes from 2025
CRR III (Capital Requirements Regulation 3) is the latest EU banking regulation, applicable in Germany since January 2025. It requires banks to value property security more conservatively:
- Property-value concept: the valuation must reflect the sustainable long-term value, not current peak prices
- Indexation restriction: increases in value beyond the property value are no longer credited
- Hard floor: the property value may not exceed the initial valuation, even if market prices have risen
- Effect on follow-up financing: even with significantly risen market prices, banks calculate internally with the original property value
What this means for you
- A higher loan-to-value than expected: a property with a purchase price of €400,000 can have a property value of only €340,000 — the loan-to-value is calculated on the lower value
- More equity needed or an interest surcharge: at 80% of €340,000 = a €272,000 credit limit, instead of €320,000 on €400,000
- Terms tiered by loan-to-value: 60% gives better terms than 80% — with property value this tips over faster
Pragmatic consequences
- Clarify the lending value with the bank in advance — before the purchase contract, not after
- For follow-up financing: a new valuation can lead to a higher loan-to-value, even though you have repaid
- A purchase price near peak prices → a property-value discount is more likely
- With top credit standing → banks are more flexible, some accept up to 100% of the property value
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