TITLE: Luxembourg's Financial Authority Amends Residential Real Estate Lending Reporting Requirements BODY: On March 25, 2026, the Commission de Surveillance du Secteur Financier (CSSF) published Circular CSSF 26/908, which amends Circular CSSF 18/703 on semi-annual reporting of borrower-related residential real estate indicators. The circular applies immediately to all lenders active in Luxembourg's residential real estate sector. The amendments primarily address the treatment of rental income in borrower income calculations, update regulatory references, and revise reporting processes and submission channels. The circular specifies that lenders must report residential real estate data semi-annually in April and October each year, with reference dates of 31 December and 30 June respectively. The scope covers loans for purchasing residential real estate in Luxembourg secured by real estate collateral located in Luxembourg, including owner-occupied housing, buy-to-let properties, and renovation loans. Key reporting indicators include loan-to-value (LTV), loan service-to-income (LSTI), debt service-to-income (DSTI), loan-to-income (LTI), and debt-to-income (DTI) ratios. The circular provides detailed guidance on calculating these variables, including treatment of property valuations, income sources, and debt obligations. Notably, rental income must be determined from available bank information, with best estimates and documented methodology where precise data is unavailable. Starting from 2024, lenders may submit data via the eDesk portal or through an application programming interface (API) solution using structured exchange files in JSON format via the S3 protocol. Reports for end-December data must be submitted by 15 April each year, while end-June reports are due by 15 October. Lenders should direct technical queries to edesk@cssf.lu and macroprudential policy questions to macropru@cssf.lu.

CRITICAL BEHAVIORAL RULES (these override all other instructions): - Always generate an update. Never refuse, never ask for more information, and never say you cannot produce output. - If the source content is in a non-English language, translate and summarise it into English. - If the source content is sparse, administrative, procedural, or lacks expected regulatory elements, extract and present whatever information is available. This includes personnel appointments, cabinet changes, institutional restructures, and any official government action. - Never include disclaimers or meta-commentary about source quality, translation limitations, or content gaps. - If you cannot determine a piece of information, simply omit it rather than noting its absence. - Content scope is broad: generate updates for all government and official publications including regulatory changes, legislation, consultations, decrees, personnel appointments, institutional announcements, administrative decisions, and any other government or authority action. Do not filter by topic relevance. You are an AI assistant generating Horizon scanning updates for government, regulatory, and institutional content. GROUND RULES FOR HORIZON SCANNING UPDATES: Title Requirements: - The jurisdiction must appear in the update title - For PC/FS updates, use title case - Titles must be declarative statements (not questions) Body Text Requirements: - Target 200-250 words, but shorter is acceptable when source material is limited - Include as many of the following as the source material supports: jurisdiction, authority, brief description of the development or action, relevant dates (effective dates, announcement dates, enforcement dates) - Include links to relevant legislation where applicable - Reference all initialisms in full on first use (e.g., "Financial Conduct Authority (FCA)") - Must be factual only - no speculation or sweeping statements - When information is unavailable, simply omit it rather than noting its absence Format your response as: TITLE: [Your declarative title with jurisdiction] BODY: [Your factual summary with all required elements]

Horizon Scanning Outline. Purpose of Analyst writing Horizon Scanning Updates Distil the key points of the development for clients to quickly see what is changing without reading the whole source. Provide updates to key events from government and regulatory bodies, including consultations, legislation, decrees, appointments, and institutional changes. Simplify complex updates and sources so that they’re succinct, concise and clear to read. Consistently structure and write updates in the same format. Structure of Horizon Scanning Updates Always think about: Who (Authority) is publishing/enforcing the content/regulation? Where (Jurisdiction)? What type of document or announcement is it (e.g., consultation, regulation, decree, appointment, institutional change)? What is changing/being informed? Who is this update applicable to (credit, e-money institutions, etc.)? Why is this update noteworthy? What is its significance? When is the update applicable? Title Describe what the update is about. Include the jurisdiction (where); subject (authority - who); and a verb (doing word such as issues, publishes, launches, etc.- what). All titles should be written in present tense. Avoid using acronyms Approx 10 - 20 words Example Turkey’s Personal Data Protection Authority Publishes Data Protection Guidance Paragraph 1 Open with the date of the update (When) Name the authority that released the update (Who) Summarise the release (What) Example On June 20, 2025, the Securities and Exchange Board of India (SEBI) launched a consultation on guidelines for responsible usage of artificial intelligence (AI) and machine learning (ML) in Indian securities markets. Paragraph 2 Summarise key points. The change/amendment aiming to achieve (what) What is its objective, why is it happening? Why is it significant? (why) Who does it impact or concern? (Who) The aim is to summarise large source documents so the reader doesn’t need to do it themselves. DO NOT just copy the first few sentences of the document. Example SEBI aims to produce guidelines providing high-level principles for market participants to establish reasonable procedures and control systems for the supervision and governance of AI/ML applications and tools. To develop this, SEBI created a working group to: Study Indian and global best practices. Prepare the guidelines. Address the concerns and issues arising from AI/ML usage. SEBI is consulting on the following principles to develop the guidelines: Model governance: Market participants should have an internal team with adequate skills and experience to monitor and oversee the use of AI/ML-based models. Investor protection and disclosure: Market participants using AI/ML that impacts their customers should disclose such usage. Relevant use cases include algorithmic trading, asset management, advisory, and support services. The disclosure must include product features, purpose, risks, limitations, and other relevant information. Testing framework: Market participants should adequately test and continuously monitor AI/ML-based models to validate their results. Fairness and bias: AI/ML models should not favour or discriminate against any group of clients. Data privacy and cybersecurity: As AI/ML systems rely on data processing, market participants should maintain a clear policy for data security. Paragraph 3 Acts as a “Call To Action”. Provide forward looking context: What actions need to be taken? Who needs to take action? Next steps to the development. Include any relevant dates (When) Response dates - should always be provided for consultations Effective dates - should be used if we know definitively that the act/reg is coming into effect on a specific date, i.e., it has been passed/adopted. Example The comment period ends on February 2, 2026, at 11:59pm and responses can be submitted here. The comment response is expected to be published in April 2026. References Should always be included, and should come from a primary source, i.e., an authority, not a news source. General Style Notes: 200-250 words Active voice Authorities and companies referenced as a single entity (“It”, not “they”) Titles in title case Internal Vixio vocabulary guide Content Style Guide Spelling should generally be in UK English, except for North American-facing (US/Canada/Caribbean) content. A Acronyms - should be spelt out in first instance with acronym in brackets. For example, Financial Conduct Authority (FCA). Act - when just referring to “the act”, it does not need a capital a. Active prose - should always try to write in active rather than passive - more direct and clearer (For example - The report was released by the Gambling Commission (PASSIVE); The Gambling Commission released the report (ACTIVE)) Advise/advice - advise (verb) - to offer suggestions (for example, I advised them to sell). - advice (noun) - give formal suggestions (for example, I gave them advice). Advisor NOT adviser Affect - verb - “have an effect on something, make a difference” Alternate/Alternative - Alternate (adjective) - means every other - Alternative (noun) - strictly one out of two - Alternative (adjective) - the other of two things. Although - not to be interchanged with “while” - means “in spite of” NOT “at the same time”. AML/CTF - anti-money laundering and counter-terrorism financing - NOT AML/CFT Among/while NOT Amongst/whilst API - application programming interface Apostrophes - to be used in possessives, i.e. an operator’s licence NOT an operators licence (for plurals, should appear after the s, with no second s). Article/Part/Section - should be capitalised when referring to a specific article - e.g., Article 4 of the Gambling Act. Assure/ensure - not to be confused - assure means “tell someone something positively to dispel doubts”, ensure means “makes certain something will occur”. B Between - should always appear with “and” NOT “to” - for example, between this summer and next summer. Big tech - two words, breaks convention of other tech words Bills - U.S. bill names should appear without full points and a space between the letters and numbers (i.e. SB 522 NOT SB522 or S.B. 522). Brackets - square brackets should be used to denote deletions or additions in quotes. Buy now, pay later - no hyphens Bullet points - see Lists C Capitalisation - all important words should have a capital in titles (i.e. just not joining words such as and/of/the/a) Cardrooms not card rooms Cases - legal cases should appear in italics, with a v for versus. Casino-resorts NOT casino resorts or resort-casinos Chief executive NOT chief executive officer Colons (:) - used between independent clauses when the second clause explains, illustrates or expands on the first (i.e. to introduce lists, quotes) Commas - to be used in figures to denote thousands to avoid confusion with years (i.e, $2,000 NOT $2000) Comparisons - compare with (highlighting differences) - compare to (highlighting similarities) Companies/organisations - singular entities (it NOT they) should be followed by “which/that” rather than “who” Ltd, not Limited Complement - to accompany something/add value Compliment - give praise (complimentary = free) Compound adjectives - should be hyphenated (sports-betting operators / first-quarter earnings) Comprise/comprising - should NOT be followed with “of”, as it means to “consist of” Conjunctions - should appear with a semi-colon before and a comma afterwards (; however, / ; therefore,) Continually - if something occurs repeatedly/regularly in the same way Continuously - if something occurs without interruption or gaps Contractions - don’t, can’t, won’t, etc. to be avoided in copy (except in marketing material and depending on tone) Contrast - by contrast - when comparing one thing to another - in contrast - simply noting a difference Counsel/Council - counsel = advice, guidance; council = an advisory group or meeting Court of Justice of the European Union (CJEU) rather than ECJ Cryptocurrency - one word, not hyphenated. Crypto-assets - hyphenated Cybersecurity - one word, not hyphenated CTF - counter-terrorism financing - NOT CFT/countering the financing of terrorism Currencies - if not using common symbols (£, $, €), then three-letter code should be used before the figure (no spaces) - for example, PLN50,000. Full term lower case (eg euro, baht, pound, dollar) m for million, bn for billion, trn for trillion. D Date format - Month, Day, Year (e.g., March 7, 2019) For Insights & Analysis summary text: can just say “today”, e.g., “Today a bill was passed for…” For Insights & Analysis body text: dates should always accompany days of the week in brackets, e.g., “On Wednesday (June 8) a bill was passed...” For NIBs: always use dates rather than days. Department for Digital, Culture, Media & Sport - ampersand Directives - for commonly used directives, style is 4th Anti-Money Laundering Directive (4th AMLD), revised Payment Services Directive (PSD2) - try to use widely known titles rather than just numbers to ensure the directives are more easily recognised. DLT - distributed ledger technology E Effect - noun - “cause something to happen”. Em dash (—) - should be used as a conjunction, not a hyphen or en dash (–). Ensure/assure - not to be confused - ensure means “makes certain something will occur”, assure means “tell someone something positively to dispel doubts”. esports NOT eSports or e-sports Euros - should be denoted with a “€” (CNTRL+ALT+4) NOT “EUR”. F fintech NOT FinTech Footnotes - avoid where possible, if necessary write them into the text or add links. G GGR - “gross gaming revenues” Government - does not need a capital g. Governor - should be written out in full, NOT Gov. Guidance (singular and plural) - does NOT need to be preceded by “a” (Guide/guides, Guideline/guidelines) H Headlines - all words should begin with a capital Horseracing NOT horse racing Hyphenation - DO: land-based, fixed-odds, cross-border, invitation-only, fast-tracked (if “a fast-tracked application”), match-fixing, year-on-year, up-to-date, whistle-blowers, six-month period, non-fungible tokens, crypto-assets, e-money - DON’T: email, blocklist, whitelist, whitelisted, cybersecurity, cryptocurrency, white paper I Impact - should be used as a noun - i.e. the new act will have an impact on… - verb means “come into forcible contact with something else”. - using “affect” as a verb is more accurate. J Judgment - legal decision Judgement - one’s own opinion Jargon - avoid using confusing terms or tabloidese, e.g. use players rather than punters. Job titles - should appear in commas after a name - for example, Neil McArthur, Gambling Commission chief executive. OR before a name with no commas - for example, Gambling Commission chief executive Neil McArthur DON’T need capitals unless a figure of importance (i.e., Prime Minister, President) Italics - whole chunks of text from legislation should be italicised; however, short quotes do not need to be. Justice Department - U.S. Department of Justice - to appear with caps (as requested by US team). K KYC - know your customer L Legislature - does not need a capital l. Less than - NOT to be confused with “fewer than” when referring to a number of something. i.e. fewer than 100 gambling tables. Licence - noun (UK), i.e. a driver’s licence License - verb/noun (US) Lists - bulleted lists should generally begin with a cap and end with a full stop (make sure they are consistent). M MONEYVAL NOT Moneyval More than - to be used instead of “over”. i.e., more than 20 players rather than over 20 players. N Names - should appear before job titles in commas - for example, Neil McArthur, Gambling Commission chief executive. Names - should be written in full in first instance and then the surname used throughout. Numbers - 1-10 should be written out (except for percentages and measurements); should always be written out at the start of sentences. Non-fungible tokens - all lowercase (non-fungible tokens) O Offence - noun (UK), i.e. commit an offence Offense - noun (US) Organisations/companies - singular entities (it NOT they) should be followed by “which/that” rather than “who” Oxford comma - (appears before “and” or “or”) - to be used sparingly and only when necessary to avoid any confusion in a sentence (i.e., where more than one “and/or” appears). Over - should not be used as a replacement for “more than”. P Parliament - does not need a capital p. Part/Section/Article - should be capitalised when referring to a specific part - e.g., Part 4 of the Gambling Act Passive voice - should always try to write in active rather than passive - more direct and clearer (For example - The report was released by the Gambling Commission (PASSIVE); The Gambling Commission released the report (ACTIVE)) Past/passed - past is a noun/adverb/adjective - “in the past”, “past experience”. - passed is the past tense of “to pass” - “the law was passed in government”. Prepaid, not pre-paid Percentages - numbers should always be written as figures percent NOT per cent or % Figures should appear with a full point between them NOT comma (for example, 5.7 percent NOT 5,7 percent) Possessives - require an apostrophe and should not be confused with plurals - i.e., an operator’s licence NOT an operators licence (for plurals, should appear after the s, with no second s). Prepositions - keep an eye out for missing prepositions - according “to”/ in accordance “with”/ in relation “to” / with regard “to” Principal - main, most important Principle - a fundamental source or basis of something Programme (UK) Program (US, UK - for computer program, Australian English) Q Quotes - speaker should be referenced in the past tense (said NOT says) Quote marks - double quote marks should be used for speech - single quote marks should only be used for titles and within quotes. (See Quote reference sheet for more information on how to use quotes.) R regtech NOT RegTech Repetition - avoid using words that mean the same thing (“and also” / “include, among others” / VLT terminals / ATM machines) Racetracks not race tracks S Seasons - when referencing a specific season of a year should be treated like a proper noun, i.e. should include a capital - Winter 2018. Section/Article/Part - should be capitalised when referring to a specific section - e.g., Section 4 of the Gambling Act. Semi-colons (;) - should be used to link two independent clauses that are closely related; or in lists without bullet points. (Do not overuse - often a full stop and new sentence will be better.) Sports betting NOT sportsbetting Sports team names Storey (pl. storeys) - level of a building (UK English) (story/stories - US English) T That defines, which informs Third person - “you” - avoid where possible. Titles - all important words should begin with a capital (i.e. just not joining words such as and/of/the/a) Tenses - content should generally be written in past tense - present tense should be used for something that has just happened and will be continuing into the future. U United States abbreviated to U.S. (Americas-focused stories on GC) / US in international content when mentioned in passing or across PC USA PATRIOT Act - should be kept as such, i.e. with caps, as it’s an acronym for “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act”) U.S. Department of Justice - Justice Department (with capitals as requested) V Vixio GamblingCompliance / Vixio PaymentsCompliance Vixio (to be used on its own after first instance) W Which informs, that defines While/among NOT Whilst/amongst While - not to be interchanged with “although” - means “at the same time” NOT “in spite of”. X Y Year quarters - Q1, Q2, H1, H2, etc. Z Acronyms AML/CTF - anti-money laundering and counter-terrorism financing - NOT AML/CFT API - application programming interface DLT - distributed ledger technology --- Now, given the above instructions and style guide, please generate a horizon scanning update based on the following webpage content. Generate the update regardless of the source language, content type, or level of detail available — this includes administrative decrees, personnel appointments, institutional changes, and any other official content. Use whatever information is present. Circular CSSF 26/908 Amendment of Circular CSSF 18/703 on the introduction of a semi-annual reporting of borrower related residential real estate indicators Circular CSSF 26/908 Amendment of Circular CSSF 18/703 on the introduction of a semi- annual reporting of borrower related residential real estate indicators To all lenders in residential real estate Luxembourg, 25 March 2026 Ladies and Gentlemen, The objective of this circular is to modify Circular CSSF 18/703 as amended by Circular CSSF 20/737 and 21/772. To facilitate reading, changes are presented in the Annex in a ‘track changes’ format. The amendments primarily concern the treatment of rental income in the calculation of borrower income, updates to regulatory references, and revisions to reporting processes and submission channels. This circular is applicable as of its publication date. Pascale TOUSSING Claude WAMPACH Marco ZWICK Director Director Director Jean-Pierre FABER Claude MARX Director Director General Annex Circular CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 CIRCULAR CSSF 26/908 2/2 Circular CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 Introduction of a semi-annual reporting of borrower related residential real estate indicators Circular CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 Introduction of a semi-annual reporting of borrower related residential real estate indicators To all lenders in residential real estate Luxembourg, 17 December 2018 Ladies and Gentlemen, The scope of the data collection refers to loans taken for the purpose of purchasing residential real estate in Luxembourg, and that are secured by real estate collateral located in Luxembourg1. Residential real estate includes existing dwellings, dwellings to be built (as per contract) or land that can be used for the construction of residential real estate dwellings. Loans that are granted to a legal entity should not be included in the reporting. This implies that loans granted indirectly to natural persons for investment purposes through ‘Société civile immobilières’ or SOPARFIs are excluded from the reporting. It should be noted that real estate credit provided to such entities falls under the scope of commercial real estate (CRE), and related indicators are part of a dedicated reporting, and in the AnaCredit reporting. 1 The scope includes loans for owner-occupied or buy-to-let housing. Any loan contracted via a real estate savings’ plan (BSH, BHW, etc.) is part of the scope. Loans granted for the renovation of a property and that are secured by a real estate property are also included in the scope. Loans for renovation works that are not secured by a real estate property should not be included. CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 2/11 1. Scope The scope of the data collection refers to loans taken for the purpose of purchasing residential real estate in Luxembourg, and that are secured by real estate collateral located in Luxembourg2. Residential real estate includes existing dwellings, dwellings to be built (as per contract) or land that can be used for the construction of residential real estate dwellings. Loans that are granted to a legal entity should not be included in the reporting. This implies that loans granted indirectly to natural persons for investment purposes through ‘Société civile immobilières’ or SOPARFIs are excluded from the reporting. It should be noted that real estate credit provided to such entities falls under the scope of commercial real estate (CRE), and related indicators are part of a dedicated reporting, and in the AnaCredit reporting. 2. Process This circular specifies the residential real estate data that will be collected through a dedicated RRE data template. The data will be collected by the CSSF semi-annually in the months of April and October each year. The reference date for the data collection will be the 31st of December and the 30th of June respectively. The template specifying the data to be reported can be found on the CSSF website. Lenders that are active in the residential real estate sector are expected to be able to produce the requested data at a semi-annual frequency. This expectation pre-supposes the ability of lenders to store and process the relevant information in their information systems so that adequate reports can be extracted regularly. 2 The scope includes loans for owner-occupied or buy-to-let housing. Any loan contracted via a real estate savings’ plan (BSH, BHW, etc.) is part of the scope. Loans granted for the renovation of a property and that are secured by a real estate property are also included in the scope. Loans for renovation works that are not secured by a real estate property should not be included. CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 3/11 3. Definitions of the indicators for borrower based measures LTV- Loan to Value At origination 𝐋 𝐋(cid:1794)(cid:1796)−(cid:1789)= Current (cid:1796) (cid:1801)(cid:1820) (cid:1815)(cid:1818)(cid:1809)(cid:1807)(cid:1809)(cid:1814)(cid:1801)(cid:1820)(cid:1809)(cid:1815)(cid:1814) 𝐋(cid:1803) 𝐋(cid:1794)(cid:1796)−(cid:1777)= Financed property (cid:1796) (cid:1803)(cid:1821)(cid:1818)(cid:1818)(cid:1805)(cid:1814)(cid:1820) 𝐋 𝐋(cid:1794)(cid:1796)−(cid:1780)(cid:1790)= (cid:1796) (cid:1815)(cid:1806) (cid:1820)(cid:1808)(cid:1805) (cid:1806)(cid:1809)(cid:1814)(cid:1801)(cid:1814)(cid:1803)(cid:1805)(cid:1804) (cid:1816)(cid:1818)(cid:1815)(cid:1816)(cid:1805)(cid:1818)(cid:1820)(cid:1825) LSTI- Loan service to income At origination 𝐋(cid:1793) 𝐋(cid:1793)(cid:1794)(cid:1783)= DSTI- Debt service to income (cid:1783) At origination (cid:1778)(cid:1793) (cid:1778)(cid:1793)(cid:1794)(cid:1783)= (cid:1783) LTI- Loan to income At origination 𝐋 𝐋(cid:1794)(cid:1783)= (cid:1783) DTI- Debt to income At origination (cid:1778) (cid:1778)(cid:1794)(cid:1783)= (cid:1783) The LTV indicator can be ‘at origination’ or ‘current’. These concepts, taken from the ESRB recommendation correspond to, respectively, new credit exposures (flows) and outstanding credit exposures (stock). Therefore, LTV ‘at origination’ is to be computed for new loans, i.e. loans granted in the reference period of the reporting. Loans that have been granted before but were modified loans should not be included with the new loans.3 LTV ‘Current’ is to be computed for the complete stock of outstanding loans. Any loan modification such as a change in the interest rate type should 3 Loans being restructured due to considerations of unlikeliness to pays shall be considered as modified existing loans and thus be excluded from the new credit exposures (flows) but included in the outstanding credit exposures (stock). CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 4/11 be reported as an outstanding loan, except if the loan took over an existing loan from another lender. In such a case the loan can be considered as a new exposure. 4. Guidance variables contained in the indicators L - Loan The variable L should contain all loans and loan tranches granted to the borrower, for the purpose of purchasing a residential real estate property, which can be existing or to be built. This loan must be secured by one or several real estate properties. The L should be aggregated by borrower and by financed property. This implies that: (i) If the borrower is a couple (i.e. if the loan contract runs in two names) it is considered as a single borrower. (ii) If two or more properties are used as collateral, but the loan relates to a single property, one single indicator should be calculated. (iii) In case a bridge loan is granted along with another loan to finance a new property, the loans should be separated according to the property they finance. No reduction of L by credit risk mitigants is allowed in the context of the reporting. L is not to be reduced by the amount of, for example, state and/or personal guarantees the debtor receives, cash reserves, or similar. L is measured by the granted amount of each loan or tranche. The granted amount is the loan amount offered by the lender to the borrower as per contractual provisions and signed by the stakeholders concerned. Borrowers may have received one or more loan offers from different lenders but a contract becomes binding only upon signature by the borrower. The amount referred to in the signed contract should be reported by the lender as the granted loan amount. L includes all loans or loan tranches at the moment of loan origination, whereas Lc is measured as the outstanding amount of the loan or loan tranches at the reporting date, taking into account capital reimbursements, loan restructurings, new capital disbursements, incurred interest, and, in the case of loans in foreign currencies, changes in the exchange rate. V – Value The variable V should be computed on the basis of the value of the property (or properties) given as collateral. If several properties are securing a given loan, the values of these properties can be summed. It is not possible to use the mortgage value registered in a mortgage collateral register (“inscription hypothécaire”) nor the mortgage promise value (“mandat hypothécaire”) to obtain the value. V should be adjusted by the total amount of the outstanding RRE loan, disbursed or not, that is secured through ‘prior’ liens on the property. In cases where one or several higher ranked mortgages CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 5/11 exist on the property given as collateral, V is lowered by the mortgage value or the outstanding amount of a loan secured in first lien by this same property. V should not be adjusted for the presence of other credit risk mitigants. Other credit risk mitigants can generally be understood as additional pledges to secure the loan but which are not RRE collateral (such as a financial collateral pledge). V-Value of the financed property (in line with CSSF Regulation No 20-08) As a derogation of the above, the variable V in line with CSSF Regulation No 20-08 should be computed on the basis of the value of the financed (purchased) property at the time of the loan arrangement. We refer to this value as “Vfinanced property” (V_FP) and we ask separate statistics for the “LTV_FP”. The V financed property differs from the V only in cases where the financed (purchased) property is not the property (or not the only property) given as collateral. At origination The V at origination should be obtained at the loan origination and be measured as the lower of: (i) the transaction value of the immovable property, or; (ii) the value as assessed by an independent external or internal appraiser at loan origination., in accordance with Articles 208(3) and, 229 of the CRR Regulation and the Circular CSSF 22/824 concerning the application of the Guidelines of the European Banking Authority on Loan Origination and Monitoring (EBA/GL/2020/06) If only one value is available, this value may be used. In the case of renovation associated with the purchase of an existing property, the V at origination should be augmented by a fraction of the renovation costs with a range of 0% to 80% of their value as stated in the offer documents (“devis”). The lender should request this information from the borrower and document the provided evidence that allow for an estimation of the renovation costs. The lender should define internal policies to guide decisions on the fraction of renovation costs that will augment the value and follow them systematically. In the case of land purchase (“terrain”) with the purpose to build, the value of the land is augmented by an estimation of the construction costs based on the offer document/construction contract from the constructor. If, for some reason, the buyer/borrower cannot provide evidence on the estimation of future construction costs, the property value should be the price of the land. In the case of purchase of a property under development (“vente en l'état futur d'achèvement”, “VEFA”), the property value is the selling price of the project as agreed in the notarial deed or the sale contract. The VAT rate for VEFA is the rate applicable to the property concerned17%. V at origination should not be computed as the ‘long-term value’ because the value at origination aims at capturing credit standards at origination. CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 6/11 Current The variable V current should be monitored and reviewed in accordance with Articles 208(3), and 229 of the CRR Regulation and the Circular CSSF 22/824 concerning the application of the Guidelines of the European Banking Authority on Loan Origination and Monitoring (EBA/GL/2020/06)in accordance with Article 208(3) CRR. Therefore it should be assessed by an independent external or internal appraiser. The assessment can be made using either a valuation model or an RRE value index. (i) Using a valuation model: Such an approach requires lenders to collect and use information on each property on a regular basis in order to update their valuations when needed as well as follow the developments of economic fundamentals. (ii) Using a RRE value index: Such an index should be sufficiently granular with respect to geographical location (i.e. municipality) and type (i.e. new, old, apartment, house) of property; if such real estate value index is not available, a RRE value index sufficiently granular with respect to geographical location and type of property can be used after application of a suitably chosen mark-down to account for the depreciation of the property. Whatever the choice, the independence of the appraiser should be guaranteed. Independence in this context is to be understood in the spirit of Article 208(3)(b) CRR, i.e. independence from the credit granting decision process. For example, if the current value calculation is performed in-house, it should not be performed by the commercial agents but by a dedicated unit such as the Risk Management unit. Further elaborating on the independence requirement, the following cases can be differentiated: (i) Valuation developed and applied in house: Employees of the lender can develop and perform such a valuation and the valuation will be considered independent as long as these employees are not commercial agents. (ii) Valuation developed by a third party and applied in house: In general, it can be assumed that a third party provider can be considered independent from the credit decision process. The independence criterion is satisfied when a third party provider develops the valuation method and a dedicated in house function other than the commercial function applies this method and performs the valuation. (iii) Valuation developed and applied by a third party: In general, it can be assumed that in cases the lender has overall outsourced the valuation to a third party, the independence criterion is satisfied. Finally, when a third party is involved, the requirements of Circular CSSF 12/552 (section 7.4) on outsourcing apply (i.e. final responsibility always lies with the lender). The computation of V current should be documented by the lender in a clear and transparent manner. Its valuation methodology is reported in the lender’s internal procedure documents and the lender is in a position to report details of its approach to the CSSF. CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 7/11 I – Income The variable I should be obtained as the sum of all sources of recurring income of the borrower, minus taxes (net of tax rebates) and premiums, such as for health care, social security or medical insurance. If a couple borrows to buy a house, the sum of the couple’s income should be considered. No other income (parents, etc.) should be considered. Lenders should document all sources of income. The income should be computed on an annual basis. Therefore, in general, I should be computed as follows: Disposable income = regular employee income (excluding bonuses, including contractually agreed payments like e.g. 13th month salary) + self-employment income+ rental income – taxes - social security contributions The rental income should be determined from the information that is available to banks. If precise information is not available, a best estimate of rental income should be provided by the reporting institution, and the methodology used to obtain it should be described. When the borrower’s income includes a significant share of income derived from other forms of investments, it is possible to deviate from this formula.In cases where the borrower’s income contains a significant share of investment income, it is possible to deviate from this formula. The lender should apply appropriate haircuts to account for the irregularity of certain types of income. The EBA Guidelines on loan origination and monitoring (EBA/GL/2020/06) as well as CSSF Circular CSSF 22/824 transposing these guidelines remain applicable with regard to the calculation of the variable I.Lenders calculating income in accordance with EBA guidelines on creditworthiness assessment (EBA/GL/2015/11) points 4.1-4.4 and with Art. L. 226-12 of the Luxembourg law of 23 December 2016 transposing Directive 2014/17/EU of the European Parliament and the Council of 4 February 2014 (“The Mortgage Credit Directive”), can follow this practice for the calculation of the variable I. D – Debt The variable D should be obtained as the total debt amount of the borrower at the moment of origination. D should include all the loans contracted by the borrower, including loans contracted in other credit institutions and for other purposes than the purchase of real estate. For instance, consumer loans should be attached to D, even if they are not secured by real estate collateral. Lenders are required to ask the borrower for any existing debt contracted and to document it. DS and LS – Debt service and loan service The variable LS contains the annual amount of loan servicing costs of the RRE loan at the moment of origination. LS should include the borrower’s effective annual payments made to service the loan. Therefore, it includes both the interest and the principal repayment of all loan tranches associated with one real estate property. Loan servicing costs should be calculated by borrower and by financed property. For bridge loans only interest payments are included in LS. The variable DS should be obtained as the annual amount of debt servicing costs of the total debt of the borrower at the moment of origination. DS should include both the interest and the principal CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 8/11 repayment of all types of loans of the borrower, including loans granted by the real estate lender and others, whether secured by real estate or not. In specific cases, the following considerations apply for the calculation of DS and LS: (i) Non-amortizing loans where only interests are paid during the lifetime of the loan, while the principal is paid at maturity should be treated exactly as such. At origination the DS/LS variables would therefore contain interest payments only. (ii) Where part of the debt reimbursement is deferred for a certain period at the beginning of the loan contract (e.g. a “moratoire”), the total servicing cost of the loan is the amount that will fall due once the loan repayment starts. (iii) Bullet loans, where no interest nor principal payments are paid during the lifetime of the loan should not give rise to the calculation of a LS nor DS. (iv) If contracted for the purpose of a real estate purchase or renovation, saving plans payments should be included in the LS or DS. A savings plan (contrat d'épargne logement) is contracted for the purchase, the construction or renovation of real estate properties and implies the regular payment of capital into a fund or to the lender. Moreover, these payments contribute to the repayment of the loan and should be considered as loan service costs. LS (or DS) can thus be computed by considering the total amount of annual contributions to the saving plan. Maturity at origination Maturity at origination means the term of the RRE loan contract expressed in years at the moment of loan origination. The maturity to be reported should be one referred to in the signed contract by the concerned stakeholders. Bridge loans Bridge loans are non-amortizing real estate loans that are used to facilitate a transaction. They can be used to finance the sale of an existing property for a limited period of time or to bridge the gap between the moment of granting a mortgage and the receipt of some amount of cash by the borrower that would be paid into the real estate purchase at a later date. In general, bridge loans should not exceed a maturity of 18 months and be non-renewable. In case of new constructions, bridge loans may extend to 24 months of maturity. Amount and number For each of the indicators illustrated above, lenders are expected to report the amount of exposures they have with a given indicator. When a number is required, it refers to the number of contracts with a given indicator. CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 9/11 Standards for transmission The filled-in templates have to be submitted to the CSSF at the defined reporting date through one of the currently accepted transmission channels E-file or SOFiE. Reports referring to end-December data are to be submitted by the 15th of April each year (or the preceding business day if this date falls on a holiday). Reports referring to end-June data are to be submitted by 15th of October each year (or the preceding business day if this date falls on a holiday). Starting from 2024, lenders may submit their data using one of the following two methods: • A dedicated eDesk approach accessible via the eDesk Portal; • The API solution based on the submission of a structured exchange file (JSON format) via the S3 (“Simple Storage Service”) protocol. The template can be found on the CSSF website. Reporting institutions should always be sure to submit the latest version of the template. In case of changes to the template the CSSF will duly inform reporting institutions. Templates should be named as follows: ESPREP-ENNNN-YYYY-MM-RES Where • ESP is the reporting type standing for special enquiries • REP is the direction standing for Report • E is the entity type, e.g. B for Banks • NNNN is the identification number of the bank, i.e. 0001...9999 • YYYY is the cut-off year of the data (reporting reference period) • MM is the cut-off month of the data (reporting reference period) • RES is the table reference. For further specification on the CSSF’s naming conventions, please refer to information published on the CSSF website. CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 10/11 Contact For any questions regarding this circular, please please contact the macroprudential policy division of the CSSF’s SSM coordination department (email: macropru@cssf.lu). For technical issues or questions related to the eDesk platform, please contact edesk@cssf.lu. This circular enters into force with immediate effect. Pascale TOUSSING Claude WAMPACH Marco ZWICK Director Director Director Jean-Pierre FABER Claude MARX Director Director General CIRCULAR CSSF 18/703 as amended by Circulars CSSF 20/737, CSSF 21/772 and CSSF 26/908 11/11

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