Bigbank: Record Month for Home Loan Contracts, All Indicators Up

September was a record month for home loan agreements this year, and the average loan amount rose more than a tenth compared to August to 141,000 euros, according to Bigbank's loan portfolio analysis.

According to Jonna Pechter, head of Bigbank Estonia, there has been continuous progress in all important indicators since spring: the number of applications and agreements has grown, as well as the average home loan agreement amount and the total volume of loans issued. "Compared to September last year, the difference is particularly drastic, as we concluded nearly twice as many agreements by number and even nearly two and a half times more by total amount," describes Jonna Pechter the changes in the home loan market.

In Bigbank's head's assessment, the main reason is good news about interest rates. "Since the competition offered by smaller Estonian banks forced major banks to lower loan margins already in early spring, September brought together with the fall in Euribor the most favorable moment for borrowing in the last couple of years," explains Jonna Pechter.

The increase in average loan amount above 140,000 euros indicates that more transactions have also begun taking place with single-family homes and slightly more expensive apartments. "A year ago, primarily smaller secondary market apartments were being sold and the average loan amount was for months around a third smaller, around one hundred thousand euros," makes Bigbank's head another important observation based on September's loan portfolio indicators.

According to Jonna Pechter, a strong September is not a surprise, as the demand accumulated over the past couple of years has not yet been satisfied and many home buyers are still waiting. "Due to the combined effect of interest rate decline, the relaxation of lending standards in spring, and rising incomes, many people who had to postpone this plan a year or two ago can now think about a new home," Pechter points to the segment for whom taking out a home loan is likely coming soon.