# Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (Text with EEA relevance), Article 124: Exposures secured by mortgages on immovable property

Extent: E+W+S+N.I.

1. An exposure or any part of an exposure fully secured by mortgage on immovable property shall be assigned a risk weight of 100 %, where the conditions set out in Article 125 or 126 are not met, except for any part of the exposure which is assigned to another exposure class. The part of the exposure that exceeds the mortgage value of the immovable property shall be assigned the risk weight applicable to the unsecured exposures of the counterparty involved.
The part of an exposure that is treated as fully secured by immovable property shall not be greater than the pledged amount of the market value or , if rigorous criteria are in force at the time in the United Kingdom for the assessment of the mortgage lending value, the mortgage lending value of the immovable property in question.
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The PRA shall ensure that the Financial Policy Committee is duly informed of the PRA’s intention to make use of this Article, and is appropriately involved in the assessment of financial stability concerns in the United Kingdom in accordance with paragraph 2.
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2. Based on the data collected under Article 430a of Chapter 4 of the Reporting (CRR) Part of the PRA Rulebook and on any other relevant indicators, the PRA shall periodically, and at least annually, assess whether the risk weight of 35 % for exposures to one or more property segments secured by mortgages on residential property referred to in Article 125 located in the United Kingdom and the risk weight of 50 % for exposures secured by mortgages on commercial immovable property referred to in Article 126 located in the United Kingdom are appropriately based on:
(a) the loss experience of exposures secured by immovable property;
(b) forward-looking immovable property markets developments.
Where, on the basis of the assessment referred to in the first subparagraph of this paragraph, the PRA concludes that the risk weights set out in Article 125(2) or 126(2) do not adequately reflect the actual risks related to exposures to one or more property segments fully secured by mortgages on residential property or on commercial immovable property located in the United Kingdom, and if it considers that the inadequacy of the risk weights could adversely affect current or future financial stability in the United Kingdom, it may increase the risk weights applicable to those exposures within the ranges determined in the fourth subparagraph of this paragraph or impose stricter criteria than those set out in Article 125(2) or 126(2).
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For the purposes of the second subparagraph of this paragraph, the PRA may set the risk weights within the following ranges:
(a) 35 % to 150 % for exposures secured by mortgages on residential property;
(b) 50 % to 150 % for exposures secured by mortgages on commercial immovable property.
3. Where the PRA sets higher risk weights or stricter criteria pursuant to the second subparagraph of paragraph 2, institutions shall have a six-month transitional period to apply them.
4. The PRA may make technical standards to specify the rigorous criteria for the assessment of the mortgage lending value referred to in paragraph 1 and the types of factors to be considered for the assessment of the appropriateness of the risk weights referred in the first subparagraph of paragraph 2.
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Source: https://www.legislation.gov.uk/eur/2013/575/article/124 (the official version)
Page: https://openlegislation.uk/eu-regulation-2013-575/article-124
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.