Recently, Troussant reported that banks’ loan desks have been booming in both the corporate and household sectors. More generous lending is generally seen as a good sign as it may imply an increase in economic activity. In other words, people consume and companies invest.
People are believed to be increasingly interested in, for example, housing and home improvement loans . Home has traditionally been a favorite investment destination for Finns.
Home has traditionally been a favorite investment destination for Finns
Finnish debt is housing debt
Despite the burning headlines that indicate that Finns are taking on more debt, the long-term trend is slightly different. Most debt was raised at the beginning of the 2000s, but it is still today: Household indebtedness has continued in recent years. However, indebtedness is slower than in previous years. In relation to household disposable income, debt growth seems to have subsided.
Young people, in particular, have a moderate attitude towards home acquisition, which is traditionally the biggest cause of indebtedness among Finns. Currently, one third of all households have mortgages, totaling € 83.9 billion.
Although the growth rate of household indebtedness has slowed down, the household debt burden has doubled in fifteen years (2000 – 2015).
Finnish households have an average European debt. Denmark and Lithuania have the highest debt, as measured by the debt-to-income ratio, which is the ratio of household debt to income.
Should I borrow?
Borrowing needs are influenced by, among other things, the need for the loan and the financial situation now and in the longer term. There are certain things to keep in mind when applying for a loan, such as your repayment ability and price comparison, whether you are applying for a home improvement or a home loan.
In our loan comparison you can easily and quickly compare the total cost of your loans:
If you have a mortgage loan from a bank, of course, it may be useful to take a credit card from them as well, as you may get it cheaper. For example, Hypo offers its mortgage customers a credit card at no annual fee. In addition, the credit card has a very low interest rate of 5%, and the account management fee is only one euro.
The situation of young people is exceptional
Owner-occupied housing has traditionally been popular in Finland; about two thirds live in their own apartment. My own home and potato land have been people’s first dreams for decades. Now, however, it seems that the prolonged economic downturn has affected, in particular, the willingness of young people to buy their own home (and that of potato land).
For example, in 2006 about 34,200 first homes (typical for young people) were sold, but in 2014 the number had fallen by nearly 15,000 to only about 20,000. Young people do not buy a home, nor do they get a mortgage. Shortly before the 2008 financial crisis, in 2007 the proportion of mortgage debt increased in all age groups.
Since then, the share of mortgage debt has only increased in households over 35 years of age; the proportion of debtors has decreased in the younger age groups.