Housing loans drawdown slides by 23% in July

Drawdowns of new housing loans in July 2022 totalled EUR 1.4 billion, a decline of 23% on the corresponding month last year, said the Bank of Finland on Wednesday.

The level of drawdowns was the same as in July 2016 and 2017. Investment property loans accounted for EUR 110 million of the new housing loans, down 29% on July 2021.

The average interest rate on new housing loans was 1.76% in July 2022. The average interest on these loans has increased notably (by a percentage point) since the start of the year.

The last time the average interest rate on new housing loans exceeded the July level was in September 2014.

The average interest has risen both for owner-occupied housing loans and for investment property loans.

In July 2022, the average interest on owner-occupied housing loans was 1.74%. Meanwhile, the average interest on investment property loans was higher, at 1.96%.

At the end of July 2022, the stock of Finnish households’ housing loans stood at EUR 108.3 billion, of which investment property loans accounted for EUR 8.8 billion.

The annual growth rate of the housing loan stock (2.8%) has decelerated steadily within a year, and in July 2021, for example, the annual growth rate was 4.4%.

The average maturity of owner-occupied housing loans was 21 years 10 months in July.

The average maturity of investment property loans was 18 years 3 months. Investment property loans are typically smaller and have a shorter maturity than owner-occupied housing loans.

The share of loans with a maturity of over 25 years in housing loans has increased in recent years.

In July, loans with a maturity exceeding 25 years accounted for 42% of drawdowns of new housing loans. The share has increased by 4.7 percentage points from July 2021 and, for example, by 15 percentage points from July 2019.