The market for loans to private clients is showing signs of calming

Kirstin Saluveer
Economist at Eesti Pank

New loans and leases to private individuals have been added less quickly in the past couple of months than previously. Although the growth in borrowing by companies has accelerated a little at the same time, this is mainly because of individual large transactions in the energy sector. Bank deposits continue to grow faster than loans and leases.

Private individuals borrowed more modestly in January than earlier. The housing loan market calmed a little as fewer new loans were taken out than in the same month of last year. This meant that the growth in the housing loan portfolio was a little slower in January than in the couple of preceding months, though it was still 6.9%. The stock of car leases continued to grow fast, increasing by 19% over the year, but fewer new contracts for car leases and other consumer loans were signed than a year earlier. The coming months will show whether the signs of cooling in the loan market for private individuals indicate a lasting reduction in demand for credit.

Over one fifth more was issued to companies in loans in January than in the same month last year. The amount lent was boosted by one-off large transactions by energy companies, as it had been in the final months of 2018. The active borrowing by the energy sector led the yearly growth in the portfolio of loans and leases to companies to accelerate to 6.3% in January. The yearly growth in the stock of loans to other sectors slowed at the same time though.

The average interest rates on loans remained similar in January to the average of the preceding year. The average interest rate on housing loans was 2.5% in January, and that on long-term corporate loans was 2.6%. The very low base interest rates have meant that the price of loans remains favourable for borrowers.

The deposits of Estonian companies and households again grew quickly in January. Corporate deposits increased by 8% over the year, while household deposits were up 10% on a year earlier. Non-resident deposits fell by 17% over the year however, and at the end of January they were equal to 6.8% of the stock of corporate and household deposits.

 

Financial sector statistics and the publication calendar

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Eesti Pank
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