Government proposes stricter mortgage rules

"The Finance Ministry has agreed new proposals with the Federation of Finnish Financial Services that would seek to limit the amount banks can lend to homebuyers, in an attempt to see off a potential housing bubble. 

However, the National Coalition Party’s Minister for Financial Affairs, Jan Vapaavuori, insisted on Tuesday that there are currently no signs of the market overheating, and said the announcement of the proposals was not related to the state of the property market or the mortgage market. He also claimed that the measures would help prevent problems in future. 

Under the proposals, a bank may grant a mortgage of up to 90 percent of the value of a property, and buyers must put down ten percent of the price of the sale upfront. First-time buyers would have some leeway, however, with the loan-to-value cap set at 95 percent. 

The tabled measures are part of the government’s banking reform bill, which is expected to have its final reading in March and April, and would not come into force before July 2016. The Finance Ministry said they decided to announce the proposals early because the issue of a potential loan ceiling has aroused widespread interest."