Risk weighting under the Standardised Approach for credit risk for an exposure secured by a mortgage on a residential property which is a second home (for instance, a holiday home).

Unless relevant higher risk weight or stricter criteria have been set by the competent or designated authority under Article 124(2) Regulation (EU) No 575/2013 (CRR), in accordance with Article 125(1)(a) CRR, exposures secured by mortgages on residential property may cover both primary and secondary residences provided that they are or shall be occupied or let by the owner or the beneficial owner in the case of personal investment companies. Provided the aforementioned criteria are met, a holiday home may qualify as residential property even if it is used by the owner only for a limited number of days during the year.  This treatment does only apply to exposures fully and completely secured by mortgages on residential property, and not where units were to be exploited commercially. For further guidance on residential and commercial properties, please see Q&A 1214 . Exposures secured by mortgages on residential property which meet the definition of "speculative immovable property financing" in Article 4(1)(79) CRR and are therefore assigned to the exposure class for "items associated with particular high risk" according to Article 128(2)( c d ) of the CRR do not qualify for the 35% risk weight. This answer is notwithstanding the Regulatory Technical Standards on conditions for capital requirements for mortgage exposures that will be developed under Article 124(4) (b) of the CRR.