Bigbank: home loan market declined in August compared to July, despite average loan amount increasing

In August, home loan agreements were concluded one-fifth fewer than in July, which set a record result, but the average loan amount exceeded the 130 thousand euro mark and the number of new loan applications remained high, according to Bigbank's home loan portfolio analysis. 

According to Arthur Taavet, acting head of Bigbank Estonia, home loan agreements were concluded in August on a similar scale as in May and June. "July was somewhat exceptionally active on the Tallinn apartment market, but on a larger scale, the market appears to have reached stability and transaction volumes are mostly similar," comments Arthur Taavet and adds that the high number of loan applications also allows for predicting an active home loan month for September. According to Taavet, the past couple of years have also not shown any significant seasonal fluctuations. "There is no longer a spring buying rally or a summer couple of months of vacation break in the home loan sector, perhaps December is the only month where activity still increases," says Bigbank's head.

The average loan amount in August was 130,661 euros, which was 6% higher than the July average. "For some time now, the average loan amount has remained in the range of 120-140 thousand euros, which is about one-fifth more compared to the low point a couple of years ago. The growth in average loan amount points to both an improvement in the interest rate environment and an increase in people's income," analyzes Bigbank's head the development of the home loan market and points out that real estate prices have not changed much in the same recent couple of years.

Taavet considers it very important that home loans and the purchase of a new home be accessible to as many people as possible, which is sometimes hindered by the sometimes very rigid valuation models of large universal banks.  "We operate on the principle that we thoroughly review each person's wishes and possibilities. Often it turns out that a home buyer who received a negative answer from a home bank is actually quite creditworthy, but his or her loan request simply did not fit into the system and parameters created by the large bank," explains Arthur Taavet and emphasizes separately that Bigbank is ready to finance home purchases even outside shopping centers.