Many Finns are unprepared for higher interest rates on loans from housing companies

A LOT Finns are unprepared for an increase in housing company loan interest rates and their impact on housing costs, according to a survey commissioned by Nordea.

Nordea Thursday revealed that more than a quarter (27%) of survey respondents were unable to say whether their housing company had any outstanding debts. Almost half (46%) of respondents who knew their housing company had outstanding debt did not know if the company had prepared for an interest rate hike in any way.

Almost three-quarters (73%) of respondents with a personal home loan said they were prepared for an interest rate hike.

Maiju Hinnothe director in charge of housing companies at Nordea, expressed concern about the results, especially given the recent spike in interest rates.

“An HLM loan is similar to a professional loan, so its conditions and flexibility are much more rigid from the point of view of an individual shareholder than a personal housing loan. Yet personal housing loans are protected against interest rate hikes much more often than housing company loans,” she said.

“It seems that people are also not considering the effects of possible interest rate increases on their finances in the case of housing company loans.”

However, interest in protecting housing corporation loans against interest rate hikes has increased significantly compared to last year.

The 12-month Euribor, the most common benchmark rate for home loans in Finland, jumped more than 0.8 percentage points in the past two months to 0.313%. The rate rose above zero for the first time in more than six years in mid-April.

Nordea recalled that an increase in the interest rate of a loan from a housing company will be passed on to the financial expense charge, part of the common charge charge paid by the shareholders of the housing company.

Housing costs for shareholders are also increasing due to soaring energy prices, which affect maintenance costs. Energy prices soared this spring after Russia invaded Ukraine.

A total of 1,033 Finns responded to the online survey conducted by Kantar TNS between 10 and 16 November 2021.

Aleksi Teivainen – HT

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