Bigbank: Home Loan Volume Tripled, Average Loan Amount Set New Record

In June, home loan agreements were concluded at over three times the volume compared to the same period a year ago, and the average loan amount grew to a record 151,600 euros, according to Bigbank's loan portfolio analysis.

According to Bigbank Estonia's head Jonna Pechter, the average home loan market has been very active throughout the spring, and the average loan amount has grown steadily from month to month, but for the first time, the amount broke through the 150,000 euro threshold. "On one hand, this shows growth in people's incomes and consequently their borrowing capacity, but I consider the recovery of borrowing confidence even more important," Pechter commented on June's results.

Bigbank concluded home loan agreements in May at over twice the volume compared to a year earlier, and compared to May, the total number of agreements remained practically at the same level. "There was certainly no major summer decline in June," said Jonna Pechter, pleasantly surprised, and according to him, the growth is not driven by refinancing of old loans, as has sometimes been assumed. "The number of agreements concluded for refinancing purposes remains only around one tenth of the total volume," said Bigbank's head.

Jonna Pechter agrees with the view that one of the growth drivers is so-called pent-up demand. "The number of loan applications has also increased significantly compared to a year ago. People have had to postpone buying their new home for a year or two, but by now their purchasing power has recovered and there is active selection happening, to complete transactions before the next rise begins," Pechter explained.

The news about Euribor cuts that arrived in early June also had an encouraging effect, according to Bigbank's head. "A quarter percentage point is not yet a very large decline, but what is most important is the general sentiment that things are moving in a more favorable direction for borrowers," said Jonna Pechter.