Indebted households are increasingly vulnerable to risks. More than 30% of Finnish households, and 60% of families with children, have housing loans.
Banks are granting large long-term loans (20–30 years) to personal customers with poor repayment capacity.
In addition, banks may extend unsecured card credits to households that have already run into debt.During inspections, the FIN-FSA has noted that collateral, and not customers' repayment capacity, too often seems to have played the major role for banks' decisions to grant loans.
"In evaluating requests for loans, banks calculate customers' cash flow coverage ratio but the programs available often set living expenses too low.
The loan amounts granted are frequently so large that customers are left with no buffers for unforeseen expense."
"Could the symptoms in the US housing market spread to Finland?According to the latest available information, the situation in the US housing market is coming to a head since credit institutions that have granted subprime housing loans to low-income borrowers have run into serious payment difficulties due to non-performing assets."
"At least two large banks, but also a number of smaller banks, that have been engaged in granting housing loans to households with very poor credit histories have announced that they have run out of assets."
"As a result of rising interest rates and slumping housing markets, the number of defaults by mortgage holders and loans taken in execution started to increase sharply towards the end of last year."
"A slowdown of economic activity in the United States would have an impact on the entire world economy and ultimately on the Finnish housing loan market."