Bigbank: People Trust Euribor to Fall and Mortgage Amounts Remain High

In December, the average loan amount for home loans concluded at Bigbank reached a near-record 140,000 euros. Borrowers have begun to prefer contracts where payment amounts are reviewed over the shortest possible period, based on the three-month average Euribor.

"The market has remained stable at a new level throughout the fall. In short, this new reality means fewer transactions and longer sales periods, but at the same price levels as before," commented Jonna Pechter, the head of Bigbank Estonia, noting that the total volume of home loans is about a tenth lower compared to a year ago, but more than a fifth higher than two years ago. "Home buyers are definitely present in the market, but they are cautious and fear paying too much, so to speak. However, when they find suitable property, they still go through with the transaction, because a home is purchased with a long-term loan, where a possible small price advantage doesn't ultimately have such a significant effect that you would give up a suitable opportunity," added Pechter.

As a new trend, Pechter highlighted that previously home loan borrowers preferred contracts based on six or twelve-month average Euribor in their repayments, but recently there has been rapid growth in contracts where the Euribor component is recalculated every three months. "People believe that Euribor must turn downward and want to benefit from the resulting price effect more quickly," explained Pechter.

According to Pechter, the jump in the average price per square meter on the Tallinn apartment market in December above the 3,000 euro mark should be taken calmly. "In Estonia, it is the case that new homes are completed by Christmas or Midsummer. At the end of the year, a number of property purchase transactions for new development homes concluded earlier were finalized, but secondary market prices bring the average price back down from the 3,000 euro mark," commented Pechter.