July housing loan drawndowns increase year on year

In July 2019, new housing loan drawdowns amounted to EUR 1.7 bn, or EUR 200 million more than a year earlier,said Bank of Finland in a press release.

The last time drawdowns of housing loans in July exceeded this total was in 2007–2008, when drawdowns of housing loans peaked. In May–July 2019 housing loan drawdowns were 7% above the corresponding period a year earlier. As a result of the increased amount of drawdowns, the stock of housing loans exceeded EUR 99 bn in July, and annual growth in the loan stock was 2.1%.

The average interest on new housing loans has declined further in 2019. The agreed annual interest rate on new housing loans in July was 0.74%, against 0.87% in December 2018. The decline in the agreed annual interest rate is explained by a narrowing of the interest rate margin. In July, the average interest rate margin on new housing loans was an estimated 0.53–0.63%.1

Recent years have seen a lengthening in amortization periods for housing loans. In July, the average amortization period on new housing loans taken out – 20 years 7 months – was half a year longer than in July a year earlier, and one year longer than in July 2017. Of new housing loans taken out in July, over 60% had an amortization period of 20–26 years. The share of all loans with longer amortization periods (over 29 years) has also grown: of new housing loans in July, 6% had an amortization period of over 29 years.