Statistics 30 September 2021 10:00 AM

Average interest on new student loans close to zero — stock of student loans exceeds EUR 5 billion

In August 2021, new student loan drawdowns totalled EUR 196 million, an increase of EUR 20 million on the previous August. The average interest rate on the new student loans was at a record low (0.10%). The central government guarantee makes student loans a low risk for the banks, which is also reflected in the small margins on the loans. In addition to the bank margin, the interest level is also influenced by the reference rate applied to the loans. Of the student loans drawn down in August, 95% were Euribor-linked[1] and their average interest rate was 0.06%. The average interest rate on new student loans linked to the banks’ own reference rates was much higher (0.84%).

As in the previous year, the summer months of 2021 saw a higher than normal level of student loan drawdowns. The months of June and July saw drawdowns totalling EUR 84 million, which was almost as much as in the same period of 2020, but 64% more than in June–July 2019.

As a result of the large amounts drawn down, the stock of student loans for the first time exceeded EUR 5 billion, to stand at EUR 5.1 billion in August. The pace of growth in the stock of student loans was still rapid (13.4%), although the pace of the upward trend has been slowing since 2018. The volume of student loans has been increased by the larger loan tranches that flowed from the student financial aid reform of 2017 and by an increased number of borrowers. The low interest rates have also increased the popularity of student loans. According to Kela’s statistics the amount paid in student loan compensation has grown in recent years, which for its part has served to slightly slow growth in the stock of student loans.

The average interest rate on the stock of student loans has been declining since the beginning of 2012, and the same trend has continued during the past year. At the same time, the share of Euribor-linked loans has grown significantly. In August, the average interest rate on the stock of student loans was 0.29%. Euribor-linked loans accounted for 83% of the stock, which is 36 percentage points more than at the end of 2011. The average interest rate on the stock of non-Euribor-linked student loans was 0.87% at the end of August.

Loans

Finnish households drew down new housing loans in the amount of EUR 1.8 billion in August, or EUR 118 million more than a year earlier. Of the new housing loans, 10.0% went to purchase for investment purposes. At the end of August, the stock of housing loans stood at EUR 105,5 billion, representing annual growth of 4.3%. Of the total stock of housing loans, 8.0% was borrowed for investment purchases. Of the stock of all loans taken out by Finnish households, at the end of August consumption loans totalled EUR 16.6 and other loans, EUR 18 billion.

Finnish non-financial corporations drew down new corporate loans (excl. overdrafts and card debt) in the amount of EUR 1.8 billion in August. The average interest on the new drawdowns was slightly down on July and stood at 1.64%. The stock of loans to Finnish non-financial corporations stood at EUR 95.8 billion at the end of August, of which loans to housing corporations accounted for EUR 38.5 billion.

Deposits

The aggregate stock of bank deposits held by Finnish households at the end of August totalled EUR 108.2 billion, and the average interest payable on the deposits was 0.03%. Of the stock of deposits, EUR 98.9 billion was in overnight deposits, while EUR 2.5 billion was in fixed-term deposits. Finnish households agreed new fixed-term deposits to a value of EUR 48 million in August. The average interest rate on the new fixed-term deposits was 0.20%.

Loans and deposits to Finland, preliminary data
	June, EUR million	July, EUR million	August, EUR million	August, 12-month change¹, %	Average interest rate, %
Loans to households, stock	139,207	139,733	140,118	4,2	1,30
- of which housing loans	104,932	105,330	105,535	4,3	0,79
- of which buy-to-let mortgages	8,315	8,362	8,408		0,92
Loans to non-financial corporations², stock	96,725	95,914	95,781	-1,2	1,28
Deposits by households, stock	107,833	108,410	108,202	6,7	0,03
Households' new drawdowns of housing loans	2,182	1,787	1,764		0,72
- of which buy-to-let mortgages	186	155	176		0,87

* Includes loans and deposits in all currencies to residents in Finland. The statistical releases of the Bank of Finland up to January 2021, as well as those of the ECB, present loans and deposits in euro to euro area residents and also include non-profit institutions serving households. For these reasons, the figures in this table differ from those in the aforementioned releases.
1 Rate of change has been calculated from monthly differences in levels adjusted for classification and other revaluation changes.
2 Non-financial corporations also include housing corporations.