Draw-downs of housing loans drop by 27% in July

Drawdowns of new housing loans in July 2023 totalled EUR 1.0 billion, which was 27% lower than the stipulated month of the previous year, said the Bank of Finland on Thursday.

The last time housing loan drawdowns were this low in July was in 2002.

Buy-to-let mortgages accounted for EUR 86 million of the new housing loans in July, down 22% from the same period a year ago.

In July 2023, the average interest rate on new housing loans stood at 4.55%. The average interest rate on new housing loans has increased markedly (by a percentage point) from the beginning of the year.

The average interest rate on new housing loans has not been higher than this since November 2008.

Average interest rates on both owner-occupied and buy-to-let mortgages have risen. The average interest rate on new owner-occupied residential mortgages stood at 4.53% in July 2023.

At the same time, the interest rate on new buy-to-let mortgages was higher, at 4.72%.

In July, the average repayment period of housing loans was 22 years and 7 months.

The proportion of loans with a repayment period of over 30 years declined to 7% of new drawdowns. In 2023 up to July, the proportion ranged from 13% to 15%. As of July 2023, households are required to repay new housing loans in a maximum of 30 years.

In July 2023, 95% of new drawdowns of housing loans were linked to Euribor rates, with the remaining 5% being linked to other reference rates.

The 12-month Euribor was used as the reference rate in 51% of new Euribor-linked housing loans, as opposed to 93% in July last year. Following the rise in the level of interest rates, the shorter 3- or 6-month Euribor rates have been used increasingly as reference rates for housing loans.

At the end of July 2023, the housing loans stock totalled EUR 106.9 billion, and its year-on-year growth amounted to minus 1.6%.

Buy-to-let mortgages accounted for EUR 8.6 billion of the housing loan stock. At the end of July, the household loan stock included EUR 17.1 billion of consumer credit and EUR 17.7 billion of other loans.

Drawdowns of new loans by Finnish non-financial corporations amounted to EUR 1.6 billion, with loans to housing corporations accounting for EUR 350 million.

The average interest on new corporate loan drawdowns rose from June to stand at 5.56%. At the end of July, the stock of loans granted to Finnish non-financial corporations stood at EUR 105.3 billion, whereof loans to housing corporations accounted for EUR 43.3 billion.