Housing loans drawdown rises in Nov but still below average

Drawdowns of new housing loans totalled EUR 1.2 billion in November 2023, which is 5% higher compared to the stipulated month of the previous year, said the Bank of Finland on Tuesday.

Despite a slight pick-up, drawdowns of new housing loans were below the usual level, as the average for November has been EUR 1.5 billion.

The amount of housing loan drawdowns is typically at its lowest in December–February.

The slight pick-up in housing loan drawdowns may have reflected changes in the transfer tax1. The most common reference rate for housing loans – the 12-month Euribor – fell slightly in November and edged down further in December.

This may also have stimulated the housing loan market. At the end of December 2023, the 12-month Euribor was 3.51%.

The average interest rate on new housing loans declined from October 2023 and stood at 4.63%.

A total of 90% of the new housing loans were linked to Euribor rates, compared with 97% a year earlier in November.

The share of new housing loans linked to banks’ own reference rates (prime rates) has increased over the past year and was 7% in November.

The average interest rate on new Euribor-linked housing loans was 4.68% in November, while the average interest on loans linked to banks’ own reference rates was 4.14%.

With the rise in interest rates, fewer housing loans have been linked to the 12-month Euribor and, correspondingly, the number of loans linked to shorter-term Euribor rates has increased.

In November 2023, 46% of new housing loans were linked to the 12-month Euribor, 12% to the 6-month Euribor and 32% to the 3-month Euribor. During the recent period of low interest rates, the share of new housing loans linked to the 12-month Euribor typically varied between 80% and 90%.

The average interest rate on the stock of households’ housing loans exceeded 4% in November 2023. Despite the rapid rise in interest rates, the amount of non-performing loans2 has not increased significantly. In November, non-performing loans accounted for 1.6% of the housing loan stock.