Monday, 19 November 2007

Nordea: Housing affordability weakening

"Housing affordability weakened in the third quarter throughout Finland."

"When the loan period can be even several decades (why not several generations?), there will certainly be both ups and downs in the economic situation during the period. People can balance the fluctuations of their own financial situation by putting money into savings whenever possible, in addition to repaying their housing loans (yeah save money, but don't forget to pay your loan, so pay your loan, save and optionally enjoy your life). These buffers can be used when needed, advises Tarja Svartström, Private Economist."

Nordea is now recommending to save, maybe they start to get scared that the "subprime" phenomenon start to spread to the Nordic and Baltic area. They could then see huge mortgage losses comparable to the one in the US. Nordic and Baltic house price have risen far above the one in the US, so let's review the situation in about 6 month time...


Anonymous said...

There is every reason that the banks would recommend saving while you have a loan with them. They can collect the difference between the interest you pay them and the amount that pay you.


HousingFinland said...

The difference make sense if the amount of debt is far greater than the saving amount. Indeed, another reason why banks are pushing the price as high as high as possible (through reckless credit standard). The interest is low but on a large sum, the return is big.