New housing loans keep growing in size : increased share of longer-than-usual loans

Abstract

In Finland, a new housing loan usually has a maturity of 25 years and an interest rate and monthly loan-servicing costs that change once a year according to the 12-month Euribor. The loan is typically close to four times the borrower's annual net income, and servicing expenditure takes up nearly one-fifth of net income. Housing loans have increased in size and the share of longer-than-usual loans is becoming ever larger. Borrowers should prepare for debt-related risks to ensure their financial margin can withstand higher interest rates and other costs.