Estonia, Financial Services, Loan, Real Estate

Eesti Pank said that the housing loan market was more active again in July. Households signed more than 1,900 loan contracts and took out 64 million euros in new housing loans. Both the number of transactions and their total value were one third higher than a year earlier. The housing loan portfolio grew by 19 million euros during July, and its annual growth rate stood at 0.3%.

Companies took out 742 million euros of new loans and leases in July, and the loan turnover for the month was the highest of any individual month this year. However, because of the base effect, the loan turnover was only 1% higher than a year before. Around one quarter of the loans that were taken out were long-term loans, and one third of these long-term loans went to the real estate and construction sector.

Although the turnover of loans and leases given to Estonian companies and households in July was the highest of any month this year, the annual growth rate in the loan and lease portfolio slowed to 1%. The slowdown in the growth of the financing portfolio was due to a reduction in the corporate portfolio, which was mainly a consequence of the reclassification of companies as other financial institutions by one credit institution. Without this, the annual growth in the loan volume would have remained at around the level of 1.5% seen in the preceding months. The total volume of loans and leases given to the real sector stood at 14.7 billion euros at the end of July.

The average interest margin in the market remained about the same as in the previous month. The base interest rate was also very low, meaning that the interest rate environment continued to be favourable for borrowers. The average interest rate for housing loans granted in July was 2.5%, and the average rate for long-term corporate loans was 2.9%.

Loans that were more than 60 days overdue made up 2.8% of the total loan portfolio by volume. The loan portfolio improved only in housing loans.

Annual growth in real sector deposits slowed in July to 3%. Although the annual growth rate for household deposits slowed again in July, the reduction in deposits came mainly from the corporate sector this time. Deposits by companies declined during the month by 69 million euros, again partly due to the reclassification of companies. The total deposits of companies and households at the end of the month stood at 8.7 billion euros.