Section 5 Interest rate risk

A mortgage credit institution shall not assume greater risk than is prudent at any and all times. A mortgage credit institution is obliged to establish a limit on the interest rate risk which shall be fixed in relation to the institution's own funds and potential losses resulting from a parallel shift of 1 percentage point in all interest rate curves and resulting from distortion of the interest rate curves. The interest rate curves shall be divided into time intervals, and value changes for each time interval shall be limited to a prudent portion of the overall limit on interest rate risk that is set for the institution.

The limit on interest rate risk shall apply to each cover pool and to the institution as a whole. Where an institution has two or more cover pools, its own funds shall for the purposes of this calculation be allocated on a pro rata basis to the overall value of each cover pool. The limit on interest rate risk within each cover pool shall not exceed the level of interest rate risk applying to the institution as a whole under the first paragraph.