Bigbank: Home Loan Applications Have Risen Over 60%

The number of home loan applications in March was more than 60% higher than in the same period a year ago and also a tenth higher than in February of this year, according to Bigbank's loan portfolio analysis.

According to Jonna Pechter, the Head of Bigbank Estonia, the reduction of bank loan margins that began in January has brought active movement to the market. "At the same time, the number of actual transactions in the Tallinn apartment market has been rather modest compared to the abundance of loan applications in the first quarter. From this, we can conclude that many people have a specific plan to purchase a new home in the near future, but have not yet fully realized it," said Pechter, who believes that one of the reasons for increased interest is the regulation of the President of Eesti Pank that took effect on April 1, which established a new procedure for calculating the maximum ratio of loan payments to income.

While the average home loan taken from Bigbank in March was 110 thousand euros, it could be about twenty percent higher in the coming months. For example, a person with a net income of 1700 euros can now take a loan of up to 141,000 euros instead of the previous 120,000 euros. "This could mean, for example, an extra room in an apartment or significantly more spacious living," gave the head of Bigbank as an example.

According to Jonna Pechter, there are many who have been patiently waiting for a year and a half for the lending environment to improve. "Euribor has remained stubbornly at its previous level, but banks have already reduced their margins, and in the meantime, some families have seen their incomes rise and with that both financial confidence and borrowing capacity," listed Pechter the reasons that have a positive effect on the home loan market.