Interest rates on new housing loans rise in March

The average interest rate on new housing loans stood at 0.87% in March 2022, said Bank of Finland in a press release on Tuesday.

The average interest rate has risen clearly (0.15 percentage points) during the last two months.

The average interest has not been this high since November 2018. Interest rates on both owner-occupied housing loans and investment property loans have risen.

The most common reference rate for housing loans, the 12-month Euribor, was still negative in March 2022, but it rose to positive levels in April 2021, for the first time in a long while.

Recently, the average interest rate on new housing loans1 is estimated to have been raised by the increasing popularity of interest rate hedges.

Households can prepare for future changes in interest rates by interest rate hedging. Over the past year-half, interest rates on new housing loans have risen across almost all payback periods. As a rule, the interest rates on longer housing loans have risen somewhat more.

In March 2022, the volume of new housing loan drawdowns was EUR 1.9 billion, which is 8% less than a year earlier but 12% more than two years ago, at the onset of the pandemic.

Investment property loans accounted for EUR 160 million of the new housing loans.

At the end of March 2022, Finnish households had a total of EUR 107.3 billion of housing loans, including EUR 8.8 billion of investment property loans. The annual growth of the stock of investment properties (7.8%) was faster than that of the stock of owner-occupied housing loans (3.2%).