Around 100 million euros withdrawn from the second pension pillar has been used for repaying loans

The money withdrawn from the second pension pillar in September was used to repay around a hundred million euros in loans to banks operating in Estonia. This was around a tenth of all the pension money withdrawn. Demand for new car leases and housing loans increased at the same time. Some 750 million euros of the money withdrawn was still in bank deposits at the end of September though.

The money withdrawn from the second pension pillar was used to repay around a hundred million euros in bank loans. Most of this, some 80 million euros, was in credit card and consumption loans. Car leases and housing loans were repaid to a lesser extent. Around a tenth of all of the money withdrawn from the second pillar was used for repaying bank loans. It is probable that loans to other creditors besides banks were also repaid. The quality of loans improved a little in September from earlier months as the share of loans overdue declined a little. This may be due at least in part to the money withdrawn from the second pension pillar. In the longer term it is important that people whose financial position has been improved by the pension money do not again take on loan liabilities beyond their means.

There was a sharp rise in new car leases and housing loans in September. The money withdrawn from the second pension pillar probably made it easier than before to cover the down payments needed for leases and housing loans. The amount issued in new car leases to private individuals was the largest ever in September at 37 million euros, which was 25% more than the average of the previous three months. As there is a major shortage of new cars, the main growth came in leases for used cars. The 169 million euros of new housing loans issued was not a record, but it was still 10-15% more than usual. The decision to repay old loans was probably taken quickly, but the demand for new loans will most likely continue to be affected by the money withdrawn from the second pillar in the coming months.

Private deposits grew by around 800 million euros in September to 11 billion euros. Given the typical growth in deposits, some 750 million euros of this growth can be attributed to the money withdrawn from the second pension pillar. The growth over the year in deposits accelerated to 24%. At the peaks so far of the Covid-19 pandemic in spring last year and this, when there was a lot of uncertainty and of restrictions, people consumed less and so deposits grew notably more than before the pandemic. With fewer pandemic restrictions in recent months, consumption has returned to normal, and deposits have grown at the rate they did before the pandemic. The introduction of new restrictions in October may cause growth to accelerate again though.

Please note: Eesti Pank published the statistics for credit institutions and lease companies for September on its website today. The statistical release describes the main changes in the statistics on credit institutions and leasing companies, covering the volume and structure of assets, loans and leases issued, deposits, and interest rates on loans and leases. The statistical release is independent of economic policy releases and is presented separately from them.

Additional information:
Hanna Jürgenson
Eesti Pank
Tel: 56920930
Email: hanna.jyrgenson@eestipank.ee
Press enquiries: press@eestipank.ee