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International Internet Magazine. Baltic States news & analytics Saturday, 19.10.2019, 23:01

Estonia: Deposits continue to grow fast

Raido Kraavik Economist at Eesti Pank, 24.09.2019.Print version
Despite interest rates remaining low, the bank deposits of households and companies are growing more and more. The deposits of households totalled 7.9 bn euros in August, which was 10% more than a year before, while those of companies were up 6% at 6.9 bn euros.

Loan transactions were made in August at the same rate as that of recent months, and more than 2000 housing loans were issued in total. Households borrowed 8% more for housing purchases this summer than they did last summer, at an average of 121 million euros a month. The same volume of properties was bought as a year earlier, but the average amount borrowed has increased. The average loan in the second quarter of last year was of 76,000 euros, but this year it was 82,000 euros. It was necessary to borrow more because real estate prices have risen. The average interest rate on housing loans remained at 2.6% in August. Demand for loans was supported by favourable labour market conditions and strong confidence.


Consumer loans remain popular, and car leases are commonly used. Both households and companies have in recent months leased a greater value of cars than a year ago, worth an average in total of 51 million euros a month. There are signs though of the market for car leases calming down. The yearly growth rate for new sales of car leases was above 20% last year, but this has now come down by a few percentage points.


At the end of August the stock of bank loans and leases to companies stood at 9.5 billion euros, which was up 5% on the year. The yearly growth rate is held up by the large loan transactions signed by the energy sector at the end of last year and the start of this. Demand for loans from other sectors has been quite modest, and less was taken in long-term loans in the past 12 months than a year previously. The average interest rate on corporate loans was 3% in August.

It is natural given the favourable economic climate that the share of overdue loans is exceptionally low. Only 0.5% of the loan portfolio of the banks was overdue by 60 days or more.









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