The average interest margin for housing loans rose in May

Mari Tamm
Mari Tamm
Economist at Eesti Pank

The total volume of loans and leases to Estonian companies and households was 3.2% larger in May than a year earlier. The financing portfolio increased by 103 million euros during the month to 15.5 billion euros with around 70% of the monthly increase coming from corporate debt liabilities.

The volume of loans and leases to companies continued to grow stably in May. The total volume of loans and leases to companies grew by 3% over the year and some 759 million euros in new loans and leases were given to companies during the month, about the same amount as a year ago. New long-term loans worth 179 million euros were granted, most of them to companies in trade, real estate or manufacturing.

Annual growth in the volume of housing loans picked up in May to 3.6%. An average of 80 million euros has been issued each month over the past three months, which is around one fifth more than in the same period last year. There was also an increase in other household loans and leases issued in the first half of this year, mainly because of car leases, which have been increasing in volume since December last year and are around 20% up over the year. At the same time there was a fall of about the same amount in the volume of car leases issued to companies.

The average interest margin for housing loans issued by the banks rose. EURIBOR, which is the base interest rate for a majority of housing loans, fell in the first half of this year, but the average interest rate on housing loans rose at the same time. This reflects the efforts of the banks to maintain profitability when interest rates are low. The average interest rate for housing loans issued in May rose to 2.3% and the average interest rate for long-term loans taken by companies was 2.5%.

The share of overdue loans in the loan portfolio remains small. The share of loans overdue by more than 60 days in the loan portfolio increased slightly to 1.6% in May with increases in overdue loans to companies in agriculture, trade and manufacturing.

The deposits of companies and households continued to grow rapidly. The annual growth in the deposits of companies accelerated to 9%, while household deposits grew by an annual 8%. Total deposits stood at 10.1 billion euros at the end of May.


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