Interest rates

This section presents data on Euribor, Eonia and Eurepo rates, the base rate, reference rate and penalty interest rate confirmed under the Interest Rates Act, yields on Finnish benchmark government bonds and banks' own reference rates. Data on Eurosystem interest rates is available under section ‘Monetary policy instruments’. Data on deposit and lending rates (eg housing loans) is available under section ‘MFI balance sheet and interest rates’.

EURIBOR, €STR AND EONIA RATES

Euribor (Euro Interbank Offered Rate) is the rate at which euro-denominated lending is offered by one prime bank to another prime bank. Euribor rates are calculated on the basis of quotes provided at 12 am Finnish time by prime banks. Euribor rates are calculated for maturities from 1 week to 12 months on the basis of act/360 day count convention.

€STR (Euro short-term rate) reflects the wholesale euro unsecured overnight borrowing costs of banks located in the euro area. The European Central Bank (ECB) is the administrator for €STR and responsible for the calculation methods and publication.

Eonia (Euro OverNight Index Average) is the value-weighted average interest rate on euro area interbank overnight loans which from 2^nd October 2019 onwards is calculated with a new methodology; €STR plus a fixed spread.

Eonia rate to be discontinued as of 3 January 2022.

European Money Markets Institute (EMMI) is the administrator for Eonia and responsible for the calculation methods and publication of both Eonia and Euribor. EMMI: https://www.emmi-benchmarks.eu

BASE RATE, AS WELL AS THE REFERENCE RATE AND THE PENALTY INTEREST RATE CONFIRMED UNDER THE INTEREST RATES ACT

The base rate is affirmed by the Ministry of Finance each year in June and December, with effect for the next half calendar year. The base rate is the average of 12-month market rates published for the 3-month period prior to the affirmation date, calculated to the accuracy of one-quarter percentage point. Until further notice, the market rate used in the calculation is the 12-month Euribor (act/365 days).

Until the end of 1998, affirmation of the reference rate was based on legislation (284/1995) enacted 3 March 1995, which amended the Interest Rates Act (633/1982); and the Bank of Finland, in practice, set the reference rate. Under other legislation (997/1998) amending the Interest Rates Act, the Ministry of Finance since then affirmed the reference rate. The Interest Rates Act was amended, effective 1 July 2002, so that the responsibility for announcing the rate was transferred back to the Bank of Finland. On the basis of the revised law, the reference rate is the same as the interest rate applied on the last main refinancing operation of the ECB prior to the first calendar day of the half-year in question, rounded up to the nearest one-half percentage point. The affirmed reference rate is then effective for the next six months. The penalty interest rate is the reference rate plus 7 percentage points as stipulated in the Act.

SECTION 4 — AMOUNT OF INTEREST FOR LATE PAYMENT (846/2009)

When the payment of debt is delayed, the debtor shall pay annual interest on the delayed amount at a rate that is seven percentage points higher than the prevailing reference rate referred to in section 12.

If the interest for late payment determined under subsection 1 is lower than the interest paid on the debt prior to the due date, interest for late payment shall be payable on the same grounds as prior to the due date. If the debtor’s commitment relates to a consumer credit agreement or any other agreement referred to in section 2, subsection 2, interest for late payment shall be payable on the same grounds as prior to the due date for no more than 180 days from the date when the entire debt was due. If a court sentence on the debt is issued before the close of the above mentioned period, interest shall be payable on the same grounds as prior to the due date until the sentence is issued.

SECTION 4A – AMOUNT OF INTEREST FOR LATE PAYMENT IN COMMERCIAL CONTRACTS (32/2013)

If the delay concerns a payment as referred to in section 1 of the Act on Payment Terms in Commercial Contracts (30/2013), the debtor shall pay annual interest on the delayed amount at a rate that is eight percentage points higher than the prevailing reference rate referred to in section 12 of this Act.

YIELDS ON BENCHMARK GOVERNMENT BONDS

Finnish benchmark government bond yields are calculated as averages of the bid rates quoted by primary dealers on the Reuters system daily at 1.00 pm Finnish time. As from 1 June 2007, the five-year yield on benchmark government bonds is based on quotations for a fixed-rate bullet serial bond maturing on 15 September 2012, and as from 1 May 2008 the ten-year yield is based on quotations for a fixed-rate bullet serial bond maturing on 4 July 2019. More detailed information on the primary dealer system for benchmark government bonds can be obtained from the State Treasury's website. Euro area ten-year government bond yields are calculated in the ECB. Until December 1998, euro area yields were calculated on the basis of harmonised national government bond yields weighted by GDP. Thereafter, the weights have been the nominal outstanding amounts of government bonds.