May was an active month for borrowing
Economist at Eesti Pank
The growth in demand from households for loans continued as the economic environment was favourable and interest rates low. The value of car leases signed in May was 22% more than a year earlier, and the value of consumer loans taken was up 10%. The rapid growth was probably caused by both strong demand and increased supply. The continuation of brisk activity in the housing loan market was indicated by growth of 9% in new housing loans. The yearly growth in the stock of household loan and lease liabilities accelerated to 7.8% in May, which is a similar rate to the growth in average wages.
The low rate of investment activity has meant that corporate loans have seen slower growth than loans to households. Borrowing by companies from banks operating in Estonia increased in May for both short-term and long-term loans. Rapid growth in loans to companies in real estate and construction reflects the large amount of construction activity. Companies in infrastructure, agriculture and forestry have taken more than before in new long-term loans, while the logistics sector stands out for its growth in short-term loans.
The average interest rate on new housing loans has climbed a little since the start of the year and it approached 2.5% in May. This is its highest level of the past four years, but over the long perspective it can still be considered very low. The average interest rate on new corporate loans largely depends on which companies have signed which loan contracts for which projects in the particular period, and so can fluctuate quite widely. In May it fell to 2.2%.
The activity in borrowing has been accompanied by rapid growth in deposits too. The annual growth in corporate deposits accelerated to 17% in May, mostly because of individual very large deposits. Rising wages kept the yearly growth in household deposits fast at 10%, where it has been for the whole of the past half year.
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 The portfolio of corporate bank loans was smaller than a year ago, as one bank transferred a substantial part of its loans to the portfolio of its foreign parent bank in the autumn. Without that the growth in the corporate loan and lease portfolio would have been around 6%.