Households incur debt via housing corporations

In June 2016, drawdowns of new loans by housing corporations¹ (excl. overdrafts and credit card credit) amounted to EUR 690 million, which is a record amount since 2010.² Although housing corporations are included in the corporate sector in the statistics on monetary financial institutions (MFIs), in practice households are responsible for a portion of the loans of housing corporations. Households pay off their housing corporation loan liabilities in the form of a regular funding charge. According to calculations by Statistics Finland, households' share of the corporate loans of housing companies amounted to EUR 15.2 bn in March 2016. The stock of loans granted by MFIs to housing corporations totalled EUR 24.4 bn in June 2016 (EUR 23.8 bn in March 2016).

The stock of housing corporation loans attributable to households has nearly tripled in the last 10 years. The annual increase in such loans (12% in March 2016) clearly exceeded the annual increase in households' housing loans (2.5% in March 2016). Housing corporation loans are mainly drawn down in order to finance renovation work and new housing.

The average interest rate on new housing corporation loans was 1.13 %, of which the margin accounted for 1.11%. The margin on housing corporation loans was slightly narrower than that on new housing loans and clearly smaller than the margin on new corporate loans.

Loans

Households' new housing-loan drawdowns amounted to EUR 1.8 bn in June 2016, on which the average interest rate was 1.21%. At the end of June, the stock of euro-denominated housing loans totalled EUR 93.1 bn and the annual growth rate of the housing loan stock was 2.7%. At end-June, household credit comprised EUR 14.3 bn in consumer credit and EUR 16.2 bn in other loans.

New drawdowns of loans to non-financial corporations (excl. overdrafts and credit card credit) amounted to EUR 2.8 bn in June 2016. The average interest rate on the drawdowns fell to 1.59%. At the end of June, the stock of euro-denominated loans to non-financial corporations was EUR 74.3 bn, of which loans to housing corporations accounted for EUR 24.4 bn.

Deposits

At end-June, household deposits totalled EUR 84.2 bn, and the average interest rate on these deposits was 0.22%. Overnight deposits accounted for EUR 59.9 bn and deposits with agreed maturity for EUR 9.7 bn of the total deposit stock.- In June, households concluded EUR 0.4 bn of new agreements on deposits with agreed maturity, at an average interest rate of 0.61%.

Notes:
MFIs comprise all monetary financial institutions operating in Finland.
Loans and deposits comprise all euro-denominated loans and deposits vis-à-vis the euro area as a whole, with countries other than Finland accounting for a very small share of total volumes.