Activity in the housing loan market picked up even further in October. More than 2000 new housing loan contracts were signed during the month, which is the largest number since 2008. Housing loans worth a total value of 71 million euros were taken out, which was 28% more than a year earlier. Repayments of loans meant that the stock of housing loans grew by a modest 0.5% over the year. In future it will be important that there is no expectation that the rapid growth in real estate prices will continue and that the current conservative approach to housing loans is maintained. Lower unemployment and higher incomes have increased the borrowing of households for consumption. Although the turnover in other household loans increased in October to 85 million euros, there were still 5% fewer loans taken out than a year earlier.
There was a fall in the turnover of new loans and leases to companies in October. Companies took out 671 million euros in loans, which was 3% less than a year earlier. The turnover in long-term loans was markedly smaller than in recent months. as 132 million euros were taken out in long-term loans in October, which was 8% less than a year ago. The relatively small loan turnover for long-term loans and leases was quite even across the sectors of the economy.
The portfolio of loans and leases to the non-financial sector shrank by 21 million euros over the month to 14.8 billion euros due to the decreased borrowing activity of companies. The annual growth of 1.5% in the portfolio remained close to where it had been in recent months.
The average interest rate on long-term corporate loans rose in October to 3.3%, which is close to the average for the year. The 6-month EURIBOR, which is the base interest rate for the majority of loan contracts, remained at 0.34%. The average interest rate on new housing loans has been around 2.5% for some time now.
Overdue loans saw their largest fall in value of any month this year in October. There was a fall in the total volume of loans overdue for more than 60 days of 36 million euros in October. The percentage of loans overdue by more than 60 days in the loan portfolio fell by 0.3 percentage points to 2.1%.
Annual growth in deposits from the Estonian non-financial sector remained at 5% in October. Deposits by households and companies increased during the month by 70 million euros to 8.9 billion euros.
Source: Bank of Estonia
Author: Kadri Salumaa, Financial Stability Department of Eesti Pank