Domestic
Tools
Typography
Finnish households had a total housing company loan burden of 19 billion euros at the end of 2017, a sum that signals a 13 per cent increase from the previous year.
Finnish households had a total housing company loan burden of 19 billion euros at the end of 2017, a sum that signals a 13 per cent increase from the previous year.

 

Nordea and the Mortgage Society of Finland (Hypo) have both expressed their concerns about the risks arising from the growing debt burdens of housing companies in Finland.

Hypo has revealed that the housing company loan burden of households jumped by 13 per cent year-on-year to a total of 19 billion euros in Finland in 2017. The debt burden, it added, is projected to creep up to over 21 billion euros by the end of 2018.

Nordea believes the country should consequently shift the focus of its efforts to curb indebtedness from mortgages to housing company loans and other loans with a greater impact on overall indebtedness

“No one is currently monitoring the interest rate and other debt management risks of those who have taken out housing company loans. We consider this very alarming,” Tom Miller, the chief executive of Nordea Mortgage Bank, comments in a press release. “It should also be noted that as the popularity of real estate investments has grown among ordinary Finns, households are faced with a growing burden of housing company loans and related risks.”

Nordea is confident that there are means to control the uncontrolled increase in housing company loans, such as by lowering the loan ceiling cap from 80 to 50 per cent of the price of a new residential unit.

“Another alternative would be a sort of obligation to make housing company loan repayments, meaning that you would not be eligible for a holiday on housing company loan repayments until the share of the housing company loan has been brought down to, for example, 50 per cent of the price of your flat,” envisions Miller.

Such measures, he views, would protect the buyers of shares in housing companies from financial risks.

“It is good that consumers have a number of financing options for buying a flat. However, it is important to ensure in advance, regardless of the loan type, that home buyers do not end up in trouble after their repayment holidays run out or interest rates increase,” stresses Miller.

Sami Vallinkoski, the chief banking officer at Hypo, also points out that banks deal with a growing number of housing companies whose renovation plans are not eligible for financing.

“The loan options of housing companies are reduced by both rapidly rising management charges and insufficient collaterals. Housing companies that have no options to carry out the renovations they want – or even need – are sailing in rough waters economically speaking,” he writes in his blog.

Aleksi Teivainen – HT
Photo: Heikki Saukkomaa – Lehtikuva
Source: Uusi Suomi

Finland in the world press

Helsinki Finland Cloudy, 20 °C
Current Conditions
Sunrise: 4:34 am   |   Sunset: 10:18 pm
87%     6.3 m/s     34.067 bar
Forecast
Fri Low: 18 °C High: 24 °C
Sat Low: 21 °C High: 22 °C
Sun Low: 18 °C High: 24 °C
Mon Low: 17 °C High: 25 °C
Tue Low: 18 °C High: 25 °C
Wed Low: 19 °C High: 25 °C
Thu Low: 19 °C High: 26 °C
Fri Low: 20 °C High: 27 °C
Sat Low: 20 °C High: 27 °C
Sun Low: 20 °C High: 27 °C

Partners