The average interest rate on housing loans rose in July

  • The loan and lease portfolio continued to increase relatively quickly in July, growing by 5% over the year
  • The average interest rate on loans has risen slightly in recent months
  • The volume of deposits was 7.3% larger in July than a year earlier

The loan and lease portfolio of Estonian companies and households grew relatively quickly in July, as it had in the preceding months, to be 5.3% larger than a year earlier. The total volume of loans and leases increased during the month by almost 100 million euros to 16.6 billion euros.

The yearly growth in the corporate loan and lease portfolio was 5.8% in July. Long-term loans of 199 million euros were granted in July and more than one third of them went to companies in real estate and construction.

Household borrowing activity remained at a similar level to that of the preceding months. The value of new housing loans issued in July was 88 million euros, and the total portfolio grew by 4.4% over the year. The volume of car leases also increased in July at the same rapid rate as previously, growing by 16.4% over the year.

The average interest rate on loans has risen in recent months. EURIBOR, which is the base interest rate for a majority of loans, has fallen further, leading to lower interest income for the banks. This has allowed banks to increase their interest margins on new loans in order to maintain their income. The average interest rate on housing loans issued in July was 2.4% and the average interest rate on long-term corporate loans was 2.5%.

The volume of loans that are long-term overdue is small and remained at the same level as in previous months. There were 195 million euros of loans in the portfolio that were more than 60 days overdue in July, which is 1.3% of the loan portfolio.

The total deposits of companies and households stood at 11 billion euros in July, which is 7.3% more than a year ago. The average wage has continued to rise relatively quickly, which has led household deposits to grow stably in volume. Corporate deposits were 7.6% larger in July than a year earlier.

Source: Bank of Estonia

Author: Mari Tamm, Economist at Eesti Pank

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