The Bank of Finland, meanwhile, published its latest data on mortgage withdrawals. revealing 1.3 billion euros of new mortgages were taken out in October, which means a drop of about one third from the previous year and in October at a new low since 2004.
Juhana BrotherusChief Economist of the Finnish Mortage Society (Hypo), highlighted Helsingin Sanomat that the value of withdrawals was even higher in October 2008 and 2009 amid the global financial crisis triggered by the collapse of Lehman Brothers.
Ownership mortgages accounted for almost 93 percent, and investment mortgages accounted for just over 7 percent. The average interest rate for owner-occupied housing loans was 3.07 percent and for investment housing loans 3.34 percent, in which case the average interest rate was 3.09 percent.
According to the Bank of Finland, mortgages have so far caused only a few problems for lenders. Non-performing loans – loans for which the borrower has not made scheduled repayments for 90 days or are judged to be unable to pay the loan – accounted for just 1.4 percent of the total mortgage loan portfolio in October.
OP Financial Group warned on Monday that euribor interest rates could rise by another percentage point to almost four percent – the highest level since the beginning of December 2008.
Brotherus of Hypo estimates that the burden on lenders may increase if the employment situation takes a turn for the worse.
“The inactivity of loan counters applies to new mortgage borrowers. The current borrowers seem to be fine with a normal repayment schedule, as they should be with the current interest rate and full employment, he told Helsingin Sanomat.
He added that it is unlikely that the market will recover even slightly in the coming months, as both the sales of apartments and the taking out of mortgages are declining.
“In November, the signs are as subdued as in October.”
Brotherus reminded that a slowdown in sales and loan withdrawals typically means a drop in real estate prices. In October, the prices of old condominiums in Finland fell by 1.9 percent year-on-year. The decline was 2.5 percent in the six largest cities and 3.3 percent in the capital region.
In November, Hypo predicted that housing prices in Finland will fall by approximately two percent in 2023, including three percent in the capital region.
“At the moment, there are no visible signs of an immediate turnaround. Sales activity remains low, loan counters are quiet and the drop in apartment prices is hardly over,” Brotherus predicted.
Aleksi Teivainen – HT
Source: The Nordic Page