The brewing NINJA mortgage crisis in Germany is largely unnoticed

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Germany’s real estate market is treading on dangerous ground as a new wave of risky lending practices emerges. Dubbed “quasi-NINJA” mortgages, these loans echo the infamous “Ninja Mortgages” of the 2008 crisis, given without thoroughly verifying the borrower’s stability. Banks are now underwriting loans that cover 100% or even 110% of a property’s value, as long as the borrower has a job—regardless of how stable or sufficient their income is.

This reckless approach mirrors the behavior that fueled the 2008 financial collapse, raising alarm bells for a potential crisis in Germany. With house prices currently falling, many borrowers could find themselves trapped in negative equity, owing more than their homes are worth. If this trend continues, the consequences for Germany’s real estate market—and its broader economy—could be devastating.

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Sources:

https://justdario.com/2024/07/how-do-you-say-ninja-mortgage-in-german-the-brewing-crisis-no-one-is-foreseeing/

https://en.wikipedia.org/wiki/No_income,_no_asset