Bankers' Association not worried about sharp growth in housing loans
Banks do not see danger of "housing bubble"
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The Finnish Bankers’ Association sees no reason for concern over the growth in recent years in Finnish housing loans.
According to a fresh study by the association, households are well prepared for the worst, and increasing numbers of homeowners are putting money into savings.
Kaija Erjanti of the Finnish Bankers’ Association says that the economic state of Finnish households appears fairly good. According to the association’s own survey, 74% of respondents said that they put money into savings either regularly, or occasionally.
"On the basis of the study there is no reason for concern", Erjanti says.
The association’s view differs sharply from that of the Finnish Financial Supervision Authority (FIN-FSA). In a review published in April, FIN-FSA said that household indebtedness was so great that it could lead to "economic disturbances".
The FIN-FSA study indicates that the average size of new housing loans has grown rapidly.
In April last year, the principal of an average new housing loan was EUR 70,000, and now it is about EUR 79,000.
For those buying their first homes, the sums were somewhat higher.
Meanwhile, the repayment of housing loans is taking longer - an average of 16 years. The first time that the Bankers’ Association examined the situation was in 1998, when the average repayment time was just 11 years.
The times are longest in the Helsinki region, where housing prices are also higher than in the rest of Finland.
Kaija Erjanti recommends close scrutiny of trends in large bank loans. "The sums will probably grow slightly in the future. However, people are well prepared for the possible increase in interest rates. The study did not give any indication that households would not manage with their loans."
She also points out that there are no indications that a very large rise in interest rates would be on the horizon. She nevertheless recommends that people keep an eye out for regional differences.
The Bankers’ Association also observes that fewer Finns are having to postpone the repayment of their loans. On the contrary, more households are putting money into savings. Most household saving is in bank accounts, but the popularity of mutual funds is also growing.
Helsingin Sanomat
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| 26.5.2005 - TODAY |
 Bankers' Association not worried about sharp growth in housing loans
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