The Board of the Financial Supervision Authority now emphasizes the assessment of the solvency of households also in terms of possible changes in debt service costs.
Financial supervision urges lenders to refrain from granting large and longer-than-usual loans in relation to borrowers’ incomes.
It also emphasizes the need to take into account possible future changes in debt service costs when assessing household solvency.
The Board has previously advised lenders, such as banks, to refrain from granting particularly long and large loans, but now emphasizes in its recommendation that the solvency of households should also be assessed for possible changes in debt service costs.
Financial supervision intends to clarify its recommendation in the first half of next year. Chairman of the Board of the Financial Supervision Authority Marja Nykänen According to the recommendation, the aim is even stronger to prevent excessive growth of household indebtedness relative to income.
“When granting loans, it is also important to take into account possible future changes in total debt service costs, so that an increase in interest rates or a disruption in the repayment of the borrower’s debts does not threaten the borrower’s ability to service its debts or maintain its consumption,” says Nykänen.
Finland According to the bank, the indebtedness of Finnish households is at a record high, according to the latest data at 136 per cent.
On the other hand, interest rates on loans have been quite low for years. If interest rates start to rise, the cost of managing loans will also increase.
Financial Supervision At the same time, the Board of Directors said that it would extend the term of the tightened loan ceiling, ie the maximum lending ratio for mortgages.
In June, Fiva lowered its loan ceiling by five percentage points to a pre-pandemic level of 85 percent.
The loan ceiling means that you can get a loan for up to 85 percent of the price of the home. In the summer of 2020, lending was facilitated by raising the loan ceiling to 90 per cent to prevent the housing market from collapsing due to a sudden interest rate shock. The loan ceiling applies to everyone except first-time home buyers.
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