Disbursement of housing loan hikes by 3.1% in Nov 2021

Finnish households’ drawdowns of new housing loans in November 2021 amounted to EUR 1.9 billion, which is 3.1 percent higher compared to the stipulated period of the previous year, said the Bank of Finland in a press release on Monday.

Buy-to-let mortgages accounted for EUR 180 million of the new housing loans. In the first 11 months of 2021, drawdowns of housing loans have increased by 12% in comparison to the same period in 2020.

Due to the high level of drawdowns, the annual growth rate of the housing loan stock remained high (4.2%) at the end of November 2021.

However, the growth rate has slowed slightly since July 2021. At the end of November 2021, the stock of housing loans to Finnish households amounted to EUR 106.7 billion, of which buy-to-let mortgages accounted for EUR 8.6 billion.

The average interest rate on new housing loans was 0.76% in November 2021. The average interest rate has remained almost unchanged for several years, but has seen a slight increase in the last few months. It has not been above its current level since May 2019.

The average interest rate rose on both owner-occupied residential mortgages and buy-to-let mortgages.

In November 2021, the average interest rate on new owner-occupied residential mortgages was 0.74% while the average rate on new buy-to-let mortgages was higher, 0.91%.

During the pandemic, many households have invested in housing, which has been reflected in increased drawdowns of housing loans and holiday residence loans. At the same time, the share of loans with longer repayment periods have increased.

Loans with a repayment period of over 25 years accounted for 40.3% of the new housing loans. Their share has increased by 10 percentage points after February 2020, since the onset of the pandemic.

The average repayment period was 21 years and 3 months in November 2021. The average repayment period of buy-to-let mortgages (18 years and 2 months) was noticeably shorter than that of owner-occupied residential mortgages (21 years and 3 months).