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Government proposal
Limitations on loans to housing companies aim to curb household indebtedness

Ministry of Finance
Publication date 16.6.2022 13.54
Press release

In future, new housing loans would have to be repaid in a maximum of 30 years. The Government is also proposing limitations on loans to housing companies.

The Government is proposing that

  • the maturity of new housing loans could not exceed 30 years
  • in new construction, housing companies could borrow at most 60 per cent of the unencumbered price of the flats to be sold
  • in new construction, the maturity of loans to housing companies could not exceed 30 years, and there could be no interest-only periods for five years from the completion of the dwelling (however, interest-only periods would be allowed during the first year)
  • the supervision of consumer creditors would be made more effective and supervision would be centralised in the Financial Supervisory Authority.

However, the rules would be flexible so that a bank could, for example, deviate from the maximum maturity in ten per cent of lending. Payment arrangements would also be possible. The proposal does not include a maximum debt-to-income ratio, also called a debt ceiling.

The new legislation will prevent the maturities of household housing loans from getting longer and will curb excessive lending, particularly to housing companies. It will also promote customer protection and improve credit-granting practices. 

Based on the Government Programme

This reform is based on the Government Programme. According to the Government Programme, the fast growth in indebtedness makes households vulnerable to falling incomes and rising interest rates. The reform is also based on the European Systemic Risk Board's recommendation that Finland should reduce the risks of housing lending.

The legislation is due to enter into force at the beginning of July next year.

Inquiries:

Pauli Kariniemi, Director General, tel. +358 295 530 210, pauli.kariniemi(at)gov.fi
Antti Makkonen, Senior Ministerial Adviser, tel. +358 295 530 013, antti.makkonen(at)gov.fi