Activity is slowly returning to the housing loan market

Raido Kraavik
Raido Kraavik
Economist at Eesti Pank

The housing loan market has rebounded from the low point it hit during the crisis. Lending volumes have increased gradually from June, and 107 million euros of housing loans were issued in August. The average amount taken as a housing loan did not change particularly during the crisis, but there were 17% fewer new contracts this summer than a year before. Other loans of 34 million euros were issued to households in August, which is around a tenth less than a year earlier.

New long-term loans and leases worth 132 million euros were issued to companies in Estonia last month, which is the lowest figure of the past six years. This indicates that companies are lacking the confidence to invest. The coronavirus pandemic delivered a serious blow to that confidence, and so the outlook for the economy remains uncertain. Loan volumes were notably smaller in most sectors in August than they were before the crisis. Borrowing activity declined less in construction and real estate, where more than half of all corporate loans were issued in August. Confidence improved considerably in the industrial sector over the summer, though loan volumes in the sector remain small. Industrial companies have taken 46% fewer long-term loans since April than they did in the same period a year earlier.

Having become more active in July, the market for car leases backed off in August. Companies and households leased 36 million euros of cars in August, which is one quarter less than in July.

Average loan interest rates did not change during the coronavirus crisis. The average interest rate for long-term loans taken by companies was 2.9% in August, and the rate for housing loans with collateral was 2.3%.

Having grown very rapidly in the preceding months, corporate and household deposits grew at a more gentle rate in August. Corporate deposits grew by 22 million euros over the month and household deposits by 18 million euros. Deposits have grown a long way from a year earlier, as corporate deposits were up 12% to a total of 7.7 billion euros, while household deposits increased by 11% to 8.8 billion euros.

 

Financial sector statistics and their publication schedule

Additional information:
Hanna Jürgenson
Eesti Pank
5692 0930
press [at] eestipank.ee