The lending market was calmer in January, as is typical for the start of the year
Economist at Eesti Pank
Although the lending market was calmer in January than in the preceding months, some 100 million euros of housing loans were issued. This means that demand for loans was still strong, given that there is usually less borrowing activity in the first months of the year.
In January, 9% more was taken out in housing loans than a year earlier. The main reason for this is rising real estate prices. As residential properties are more expensive to buy, down payments and loans to pay for them are larger. The average amount borrowed rose by the end of last year to around 90,000 euros. The stock of housing loans issued by banks was 8.1 billion euros in January, which was 7% more than a year earlier.
The stock of other loans and leases totalled 2 billion euros in January. Consumer loans have been issued a lot more in recent months than a year earlier, and 35 million euros of such loans were issued in January. A large amount has been issued in car leases, though the earlier rapid growth in the market for car leases has ceased. Substantial demand for consumption financing is to be expected, as unemployment is low and confidence is high.
The corporate loan market was boosted by individual large loans granted to companies in real estate and construction. At the end of the month the banks operating in Estonia had issued a portfolio of loans and leases to companies that totalled 9.3 billion euros, which was the same amount as a year earlier. The growth in the size of the portfolio was slowed by the closure of two branches operating in Estonia, and without this the portfolio would have grown by around 3% in size. Companies are also financing their investments with funds from abroad, from the non-bank financial sector, and from other non-financial companies.
The quality of the loans issued by banks in Estonia remains very good. The share of loans that are overdue by more than 60 days is only 0.6%. There has been a small rise in recent months in the share of consumption loans with payments delayed more than 60 days, as it has gone up by 0.3% to 1.5%.
Deposits in the banks operating in Estonia continue to grow fast. Estonian companies have a total of 7 billion euros in deposits, and households have 8.2 billion, with both groups showing annual growth of 8%. Non-resident deposits made up 8% of all deposits, and the large majority of them are deposits by households from other countries in the European Union.
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