OP: Finnish borrowers are increasingly interested in managing interest rate risks

The financial group revealed that the euro-denominated share of new mortgages hedged against interest rate increases – most often at the interest rate cap – rose by 55 per year-on-year in February.

New mortgage accounted for 41 per cent, which is well over 30 per cent of the total mortgage portfolio. According to the financial group, hedging tools are especially popular for long-term loans and loans for used single-family homes.

“Russia’s attack on Ukraine creates uncertainty about interest rates, and it is still advisable to guard against rising interest rates,” he said. Kaisu Christie, ‘s Vice President, Credit, Collateral and Real Estate. “Interest rate protection is of particular interest to young people and low-income people taking out a new mortgage.”

By far the most popular interest rate cap, he said, is 0.01 percent.

OP Financial Group forecasts that 12 will rise above zero this year and further to percent over the next couple of years.

For lenders, a lucrative , interest rate caps and other hedging instruments such as collars will benefit borrowers if interest costs exceed the price of such tools. Bank experts have described interest as a form of insurance that offers peace of mind over the cost of borrowing.

OP Financial Group also emphasized on Wednesday that only six per cent of housing company loans are hedged against interest rate fluctuations.

“The primary reason for the low level of protection is that people are not aware of the possibility of hedging mortgages against interest rates and are therefore not discussed at meetings,” he said. Heikki PeltolaVice President, Retail Banking, OP Financial Group’s small and medium-sized companies.

– However, it is worth exploring the possibility of interest rate protection, as the interest rate increase falls on particularly large housing company loans.

With an average housing of only EUR 300,000, some housing companies have taken out loans of up to seven figures. Large loans are common, especially in new buildings inhabited by large corporate loans and housing companies that have done plumbing or exterior renovations.

Aleksi Teivainen – HT

Source: The Nordic Page

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