Lowering the loan cap will reduce the risks associated with debt
JulkaisusarjaBank of Finland. Bulletin
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-201805241577
A macroprudential decision taken by the Financial Supervisory Authority's Board in early spring to tighten the maximum loan-to-collateral (LTC) ratio for housing loans will bolster the stability of the Finnish financial system. The policy adjustment will help curtail growing household indebtedness by restricting the provision of large housing loans relative to collateral and by increasing awareness of the risks inherent in such loans. It will not, however, remove the risks associated with outstanding household debt and its protracted growth. New macroprudential tools are still required to contain growing indebtedness.
Issue: Financial stability