Bigbank: April was the strongest home loan month of the year, average loan amount rose sharply
The number of home loan agreements remained at the same level in April compared to the previous month, but the total amount of money grew due to an increase in average loan amount of more than 10 percent, according to Bigbank's loan portfolio analysis.
According to Bigbank Estonia's director Jonna Pechter, April and March were very similar in other key indicators, but the average loan amount grew to 141 thousand euros, which is nearly 11% more than in March. "In March there was a strong spike in activity regarding new agreements and April maintained the same good level. However, May should reveal whether consumer confidence has recovered enough that the trend curve would move upward even before summer," commented Pechter, adding that the further decline in Euribor in April should have an encouraging effect on home loan borrowers.
According to Pechter, there is reason to be pleased about the continued activity in April also because no negative turn, which was speculated about in early spring, has occurred. "It seems that people have gradually gotten used to constantly arriving volatile messages in the field of international economics and politics and do not dramatize the situation. Rather, people worry about everyday domestic matters, such as the continued rise in prices of goods and services," said Jonna Pechter, referring to the increase in living costs as one of the main problems restraining the home loan market.
According to Bigbank's director, May is typically active in terms of home loans and in this case the market may also be affected by a 2% higher VAT rate coming into force in July. "The tax increase affects precisely new apartments, in which there is enough interest for both developers and buyers to complete the transaction before July, as neither side wants to bear the price increase that comes with the force of law," explained Pechter, and gave an example that for a family apartment costing 200-250 thousand euros, the effect of the tax increase is approximately four to five thousand euros.
