Holiday cottage loan drawdown reduces by 16%

Finnish households drew down new housing loans for the purchase of holiday homes (holiday cottage loans) to the value of EUR 126 million in June 2022, which is 16% less than a year earlier in June, according to Bank of Finland.

Holiday cottage loans were drawn down at an exceptionally high rate in 2020 and 2021.

Compared to the period before the pandemic, i.e. June 2019, drawdowns of holiday cottage loans were 35% higher in June 2022.

The average interest rate on new housing loans for purchase of a holiday home rose in June, to stand at 1.71%.

This was 0.050 percentage points higher than in May 2022 and 0.78 percentage points higher than in June 2021.

The higher average interest rate on new loans for holiday cottages is explained mainly by the rise in Euribor rates. The average interest rate on these loans was last higher in March 2015.

At the end of June, the stock of holiday cottage loans stood at EUR 4.6 billion. Due to the lower number of drawdowns, the annual growth rate of the stock slowed in June, to 6.7%. The average interest rate on the stock of loans for holiday residences rose from May, to stand at 1.14%.

New drawdowns of housing loans by Finnish households amounted to EUR 1.9 billion in June 2022, which is EUR 255 million less than in the same period a year earlier.

Investment property loans accounted for EUR 139 million of the newly drawn housing loans.

The average interest rate on new housing loans rose from May to stand at 1.60% in June.

At the end of June 2022, the stock of housing loans totalled EUR 107.9 billion, and the year-on-year growth was 2.9%. Investment property loans accounted for EUR 8.8 billion of the housing loan stock. At the end of June, Finnish households’ loan stock included EUR 17.0 billion of consumer credit and EUR 18.1 billion of other loans.

In June, Finnish non-financial corporations drew down new loans worth EUR 4.8 billion, including EUR 637 million of housing corporations’ loans.

The average interest rate on new corporate-loan drawdowns declined from May, to 1.49%. At the end of June, the stock of loans granted to Finnish non-financial corporations was EUR 102.9 billion, of which loans to housing corporations accounted for EUR 40.8 billion.