Going in the loan market is like it was three decades ago – unfortunately, writes editor-in-chief Timo Paunonen.
Business- and cottage loans are sought and granted at a frantic pace.
There are three types of buyers on the loan market.
Teleworkers and investors dreaming of a first home, bored with interest rate timing and cramped spaces.
Banks distribute cheap money, the market become hot and prices are rising in the metropolitan area and growth centers – despite the interest rate. The loan amounts are wild, especially in the Helsinki metropolitan area.
Read more: Cottage loans are just swelling – 100,000 euros is often not enough
Many Finns have become housing investors.
According to Statistics Finland, at the end of 2019, there were about 235,000 private housing investors. They therefore have an apartment where someone else lives for rent. Last year, share housing prices rose by almost five per cent in Helsinki, and prices in Turku and Tampere also rose almost as much as in Helsinki. There are already so many investment homes for everyone can not find In Helsinki, tenants: rents are falling.
Does it feel go familiar? Yes. The late 1980s saw a similar phenomenon where deregulation blew up the loan market and people bought their eyes as tires for everything that was for sale: real estate, cars, woods, cottages, plots and stocks. Loans were hoarded by private citizens and businesses, and banks burned money in their incomprehensible transactions, which took over listed companies and cracked down on competitors.
Flush took over everything, even the Communist Party Skp joined their shareholdings and trade with supporters of capitalism and the open market economy – with devastating consequences.
After the crazy years, a cold autumn struck.
Losses on venture capital investments devastated companies, banks, one central labor market organization (TVK) and hundreds of thousands of citizens, many of them for the rest of their lives.
Helibor, or market interest rates at the time, was not intimidating. There was a perception that the economic growth based on debt could continue indefinitely as long as one managed to consume and keep the wheels turning.
The same oblivion to interest rate risk seems to bother the people even now.
That is, in principle, understandable.
If looking around, money downright rains to alleviate the consequences of the corona pandemic. Hundreds and thousands of billions are being blamed on us and elsewhere for various targets, claiming to be revived, revived. So why couldn’t even an ordinary citizen revitalize their own lives and invest in the midst of a depressing coronary crisis.
Chief Economist of the Mortgage Association Juhana Brotherus evaluates In economic life (11/2021) that the investment loan portfolio is now around EUR 10 billion, if housing company loans are included. If interest rates go up sharply and unemployment strikes, there is a debt bomb in its hands, the social effects of which are wild, downright frightening.
That is, every mortgage borrower and lending bank should test their solvency if everything in life goes to pine.
I hope we do not think that society will repair the damage. Three decades ago, the banking crisis did so, dearly.
In progress The current loan boom has radiated some to the provinces as well.
Second homes and cottages are hauled for remote work. The phenomenon is still marginal, and does not change the big picture of the division of the housing market into value dwellings in the south and rotting nests in the provinces.
A true story about a small village last summer: a couple arrived at the municipal office to ask about old log houses for sale as a telecommuting home. Well, here’s an opportunity for rural heirs. Once the money is in circulation, forget the quarrel and put the empty house up for sale.
Municipalities could be active in this.
Set up an old house in Tinder, where the homeless are looking online for the second home of their dreams for themselves.
The second home can also become the first home.
After all, it would be good to retreat to lick wounds if the life built on debt collapses.
Source site www.is.fi