The most common reference interest rate for Finnish mortgages, ie the 12-month Euribor, has been negative for five years now, but in addition, margins have also fallen to their lowest level for many years. Is there any point in making interest rates at the current level?
“This is an exceptional situation. From the point of view of the mortgage customer, the situation is very good when the reference rate is negative and the margins are favorable. The customer benefits ”, Nordean Vice President, Retail Business Sara Mella says.
Rental security Chairman of the Board Timo Metsola finds the situation somewhat worrying, even though a low interest rate is an advantage for a mortgage borrower.
“When an exceptional interest rate continues for such a long time, it tends to revolve around the stock and housing markets as gains in value. It is an interesting question how this situation will be resolved in time or whether it will really last for decades to come, ”says Metsola.
Manager Lassi Järvinen Taalerista estimates that the current interest rate situation will be normal, living for some time to come.
“As the economy picks up, longer interest rates may rise, but short interest rates may not yet. We will probably live in this situation for quite some time. As a result, the prices of various types of book-entry securities, such as shares and housing, will rise, ”says Järvinen.
Mella believes that at current interest rates, buying a home is sensible, and customers will benefit from the fierce competition from banks. According to the Bank of Finland’s statistics at the end of June, the market leader was the size of the housing loan stock ON. The second largest was Nordea and the third was Danish bank. The remaining players had significantly smaller shares.
However, Metsola recalls the division of the mortgage market into growth centers and the rest of Finland.
“The mortgage market has two faces,” says Metsola.
“As I understand it, there is a struggle for market shares in growth centers, but it may be that in declining Finland, the decline in one’s own market share has not been seen as a problem. One challenge is to ensure that mortgages are available throughout the country and that it is possible to buy and sell owner-occupied housing, ”says Metsola.
Is it worth investing in housing?
According to the Bank of Finland, December was a record December for new mortgages, and in September – December, new mortgages were raised by more than 13 per cent more than in the corresponding period in 2019.
According to Mella, at the current low interest rate level, the acquisition of investment housing is still smart.
“It’s especially about decentralization. Investing in housing and a stable return from it makes sense, ”says Mella.
In Metsola’s opinion, in some places it would be worth putting ice in a hat when investing in housing. According to him, for example, in the eastern city center of Helsinki, the demand for investment housing has been brisk recently, and the price development has also been exceptional.
“This will lead to an increase in the total amount of loans. The housing market has a huge positive mood in the housing and investment housing market. A little even that kind of charm. After all, no one wants excesses. I don’t mean the brakes on the bottom. There is something different about ice in the hat than the brakes on the bottom, ”says Metsola.
In Järvinen’s opinion, there are grounds for investing in housing in certain places where people are packed.
“We should not run very far after high returns so that there is no risk of the value falling,” Järvinen says.
Source: Arvopaperi by www.arvopaperi.fi.
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