Presentation of lending for house purchase

Can loans that are directly disbursed to customers be considered as lending for house purchase?

The relevant regulations do not explicitly require banks to verify whether the disbursed loans are used for purposes defined in the contract. This is particularly relevant in cases such as real estate refurbishments, where loans are directly disbursed to customers. From our perspective, answering this question is important for regulatory and supervisory controls.    Relevant regulations: Annex V paragraph 88(b): ‘Lending for house purchase’ shall include credit extended to households for the purpose of investing in houses for own use or rental, including building and refurbishments, as defined in the Table of Part 2 of Annex II to the ECB BSI Regulation ECB BSI Regulation Annex II, Part II: lending for house purchase (credit extended for the purpose of investing in houses for own use or rental, including building and refurbishments). It comprises loans secured on residential property that are used for the purpose of house purchase and other loans for house purchase made on a personal basis or secured against other forms of assets. Housing loans granted to sole proprietorships/partnerships without legal status are included in this category unless the reporting MFI knows that the house is predominantly used for business related purposes, in which case it is reported as ‘other lending of which sole proprietorships/partnerships without legal status’;  ECB Manual on MFI balance sheet statistics: Lending for house purchase refers to loans granted for the purposes of investing in housing for own use or rental, including building and refurbishments, or for the purchase of land. Loans included in this category are those secured on residential property that are used for house purchase, as well as other loans for house purchase made on a personal basis or secured against other forms of assets. The category includes (without being separately identified) housing loans to sole proprietors/unincorporated partnerships without legal status, if the housing is predominantly used for personal accommodation.