Many Finns have not prepared for interest rate hikes on housing company loans
VARIOUS Finns are not prepared for the rise in interest rates on housing shares and its impact on housing costs, according to a study commissioned by Nordea.
Nordea on Thursday was revealed that more than a quarter (27%) of respondents could not say whether their housing company was in debt. Nearly half (46%) of respondents who knew their housing company was in debt did not know if the company was prepared for a rise in interest rates in any way.
Nearly three-quarters (73%) of respondents with a personal mortgage said they were prepared for an increase in interest rates.
Maiju HinnoNordea’s Senior Vice President, Housing, expressed concern about the results, especially due to the recent rise in interest rates.
“A housing loan is comparable to a corporate loan, so its terms and flexibility are much more rigid from the perspective of an individual shareholder than a personal mortgage. Still, a personal mortgage is protected against rising interest rates much more often than mortgage loans, he said.
“It seems that people are not taking into account the impact of possible interest rate rises on their finances, even with mortgage loans.”
However, interest in hedging housing loans against rising interest rates has grown significantly from last year.
Finland’s most common reference rate for mortgages, the 12-month Euribor, has risen by more than 0.8 percentage points to 0.313 per cent in the last couple of months. Interest rates rose above zero for the first time in more than six years in mid-April.
Nordea recalled that the increase in the interest rate on the housing loan is reflected in the financial expense fee, which is part of the common cost fee paid by the housing company’s shareholders.
Shareholders’ housing costs will also rise as a result of rising energy prices, which is reflected in the maintenance fee. Energy prices have risen this spring after Russia occupied Ukraine.
A total of 1,033 Finns responded to Kantar TNS’s online survey on November 10-16, 2021.
Aleksi Teivainen – HT