The 12-month Euribor is the most widely used reference rate for housing loans in Finland.
The European Central Bank’s (ECB) announcement that it will halt its bond purchases and maintain interest rates at their current levels is not without its implications for mortgage borrowers in Finland, reminds Juhana Brotherus, the chief economist at the Mortgage Society of Finland (Hypo).
“It’s time for mortgage borrowers to wake up!” he stated on Twitter on Thursday.
“The ECB will raise Euribor rates next year. The first interest rate hike is expected in September 2019. It remains to be seen whether or not the economy can withstand higher interest rates,” he continued.
The 12-month Euribor is the most widely used reference rate for housing loans in Finland. The Bank of Finland has reported that over 90 per cent of all housing loans in the country were tied to Euribor rates in 2014.
The ECB on Thursday announced it will suspend its massive bond-buying programme by Christmas and keep interest levels at their current, record-low levels at least through the summer of 2019. Its announcement sent the euro tumbling as investors were expecting interest rates to start creeping up before the second half of next year.
Jan von Gerich, the chief strategist at Nordea, urged mortgage borrowers to brace for an increase in interest rates earlier this week.
“In Finland, floating-rate loans account for a higher share of housing loans than anywhere else in the eurozone. An increase in interest rates will therefore be felt here sooner than in other countries,” he explained.
Aleksi Teivainen – HT Photo: Martti Kainulainen – Lehtikuva Source: Uusi Suomi
