Browsing by Subject "households"

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  • Bank of Finland (2021)
    Bank of Finland. Bulletin 1/2021
    The crisis caused by the COVID-19 pandemic swept the Finnish economy into a sudden recession in 2020, but the progress with vaccinations means we can already see light at the end of the tunnel. The negative economic impacts of the crisis have so far been less than feared, and the most recent economic forecasts are encouraging.
  • Bank of Finland (2020)
    Bank of Finland. Bulletin 2/2020
    The corona crisis has impacted negatively on the Finnish economy and on the country’s banks and their customers in a number of ways. The banks now need to deploy the financial buffers they have been accumulating since the global financial crisis just over a decade ago. By granting new loans and amortisation holidays, the banks can for their part help businesses and households survive the acute phase of the current crisis. At the same time, banks must prepare for an increase in loan losses from previously granted loans.
  • Bank of Finland (2021)
    Bank of Finland. Bulletin 3/2021
    The COVID-19 pandemic will ease due to the vaccination programme, and as a consequence the Finnish economy will start to grow at a brisk pace. As the COVID restrictions end and uncertainty decreases, households will be able to consume more freely. With economic growth also strong globally, this will give a fillip to Finland’s foreign trade. The pandemic is, however, not yet finally over. There is still the threat that it could worsen again, and this casts a shadow over both the growth outlook for Finland and that for the global economy as a whole. The Finnish economy will grow 2.9% in 2021 and 3.0% in 2022. The rapid growth will, however, be temporary, and the pace will slow to 1.3% already in 2023.
  • Kärkkäinen, Samu; Viertola, Hannu (2021)
    Bank of Finland. Bulletin 3/2021
    The COVID-19 pandemic and resulting lockdown measures have imposed severe constraints on the consumption opportunities of households, and demand has especially collapsed in a number of service industries. Households have accumulated a significant amount of savings since early 2020 due to the shortfall in consumption caused by the pandemic. The release of these savings into private consumption or housing demand over the next few years may result in economic growth proving much stronger than anticipated in the baseline forecast.
  • Bank of Finland (2019)
    Bank of Finland. Bulletin 5/2018
    Finnish growth will continue, but at a slower pace than in recent years. There is no returning to the growth rate that preceded the financial crisis.
  • Bank of Finland (2018)
    Bank of Finland. Bulletin 3/2018
    Finland's economic growth will continue and remain broadly based. Strong global demand, improved cost-competitiveness, growth in household income and favourable financing conditions will all support growth over the forecast period. GDP growth forecasts for 2018–2020 stand at 2.9%, 2.2% and 1.7%. The declining growth rate in the immediate years ahead reflects the moderate long-term outlook for growth. Inflation will remain close to 1% over the years 2018–2019 before gathering pace and reaching 1.5% in 2020.
  • Bank of Finland (2017)
    Bank of Finland. Bulletin 5/2017
    Finland’s economic growth is broadly based, exports are fuelling growth and at the same time domestic demand continues to be strong. According to the Bank of Finland forecast, Finland’s GDP will grow 3.1% in 2017 and 2.5% in 2018. Over the years 2019–2020 the economy will grow approximately 1.5% per annum. Inflation will gather pace but throughout the forecast period will be slower than elsewhere in the euro area.
  • Voutilainen, Ville (2019)
    Bank of Finland. Bulletin 2/2019
    Finnish household debt relative to income has grown significantly since the turn of the millennium. In future, excessive borrowing could be stemmed by, for example, restricting the amount of credit available to households relative to their levels of income
  • Mäki-Fränti, Petri (2016)
    Bank of Finland. Bulletin 3/2016
    The ability to predict future income is essential for the wellbeing of households. While there have been no major changes in Finnish households’ income uncertainty over the past 25 years or so, there would appear to be some ingrained differences across population groups. Income uncertainty has been higher for the less educated than for the highly educated, while risks to the income of the self-employed are high relative to their expected income development. Public transfers have moderated the risks associated with earnings development, notably for the less educated. The significance of public transfer schemes for levelling out income development becomes more apparent as the population ages, with a larger share of the population reliant on public transfers to make ends meet.
  • Bank of Finland (2019)
    Bank of Finland. Bulletin 2/2019
    Whereas recent economic and financial developments in Finland do not pose any immediate threats to financial stability, the permanent risks related to household indebtedness and the structure of the banking system have increased further.
  • Bank of Finland (2017)
    Bank of Finland. Bulletin 5/2016
    The European Systemic Risk Board (ESRB), which is responsible for macroprudential oversight of the EU’s financial system, has issued a warning to Finland concerning the medium-term vulnerabilities related to household indebtedness and lending for house purchase. For purposes of risk mitigation, more efficient instruments should be made available to the Finnish authorities to limit the maximum size of new housing loans relative to the loan applicant’s debt-servicing capacity. There are, however, no threats to the stability of the Finnish financial system in the short term.
  • Bank of Finland (2017)
    Bank of Finland Bulletin. Analysis
    There are no immediate threats to the stability of the Finnish financial system. The relocation of Nordea’s corporate headquarters will, however, increase the banking sector’s exposure to structural vulnerabilities. The regulatory and supervisory reforms already implemented and participation in the European Banking Union will serve to mitigate the risks associated with the expansion of the banking sector, but adoption of a common European Deposit Insurance Scheme remains an important measure yet to be implemented within the Banking Union. An income-related cap on loans is needed to rein in the increase in household indebtedness.
  • Bank of Finland (2021)
    Bank of Finland. Bulletin 3/2021
    Economic growth will gather pace across the board as the pandemic eases. Strong consumer confidence, together with the release of pent-up demand, will support household consumption. Finnish exports will rapidly rise back towards pre-pandemic levels as export markets revive, with investments also supporting economic growth. The Finnish economy will grow 2.9% in 2021 and 3.0% in 2022. This fast pace of growth will, however, be only temporary, and in 2023, GDP growth will slow to 1.3%, reflecting the lacklustre longer-term growth prospects of an ageing economy.
  • Putkuri, Hanna (2016)
    Bank of Finland. Bulletin 2/2016
    Finland’s financial system is, by structure, vulnerable to risks associated with lending for house purchase. Housing loan volumes are large relative to other lending by banks and requirements on banks’ own funds. The fact that household debt levels have increased and that housing wealth constitutes a large proportion of household assets also increases the vulnerabilities. In addition, covered bonds secured by housing loans play a significant role in bank funding and investment. However, the increase in vulnerabilities has largely levelled off in the 2010s.
  • Putkuri, Hanna (2015)
    Bank of Finland. Bulletin 2/2015
    The trends of the early post-millennium years – a larger average loan size and longer loan repayment periods – have permanently increased household vulnerability to debt-related risks in Finland. Household indebtedness embraces another four features that amplify the risks to the economy: the debt level is high relative to GDP, risks are unevenly distributed, loans are tied to variable interest rates and, in part, loans are large relative to the collateral provided. The stabilisation of debt developments in the 2010s has been positive for financial stability.
  • Koskinen, Kimmo; Putkuri, Hanna (2018)
    Bank of Finland. Bulletin 2/2018
    Household indebtedness and overheating of the housing market have contributed to financial crises throughout history. However, a considerable proportion of banks’ losses during crises have resulted from corporate loans. The situation arises when indebted households cut down their spending during an economic downturn, increasing companies’ financial difficulties. The current situation in Finland is twofold: household indebtedness is record-high and has been increasing for a long time, but housing market developments have for the most part remained moderate. The percentage of loans related to housing and real estate is high.
  • Topi, Jukka; Vauhkonen, Jukka (2017)
    Bank of Finland. Bulletin 2/2017
    Finland has prepared for risks on residential mortgage loan markets by setting a maximum loan-to-value ratio for housing loans. In addition, preparations are currently underway for imposing minimum risk weights on housing loans granted by banks. On top of these, to curb borrowing it would be advisable to consider the adoption of tools that take household income into account, such as loan-to-income caps. In this article, we use simple examples to illustrate how such instruments could be deployed to restrain dangerous growth in lending for house purchase and household debt, but will not express an opinion on the superiority of one tool over the others. Different instruments supplement each other, and no individual tool can solve all problems.
  • Kauko, Karlo; Norring, Anni (2018)
    Bank of Finland. Bulletin 2/2018
    Borrower-based instruments generally refer to measures aimed at mitigating the indebtedness of individuals or households. These instruments have most commonly been used to impose limits on housing loans. The purpose of borrower-based instruments is to contain household indebtedness and prevent house price bubbles. The most common instrument in Europe is the maximum loan-to-value (LTV) ratio for housing loans, i.e. the loan cap, which is also in use in Finland. Research has proven the effectiveness of borrower-based instruments in preventing both price bubbles and excessive indebtedness.
  • Aaltonen, Markus; Koskinen, Kimmo (2019)
    Bank of Finland. Bulletin 2/2019
    Consumer credit to households keeps increasing, and roughly one in four Finns held consumer credit in 2019 (Finance Finland).
  • Putkuri, Hanna (2015)
    Bank of Finland. Bulletin 2/2015
    Regional divergence is a strong feature of the Finnish housing market and household debt. House prices are higher in growth centres than in the rest of the country, and households in growth centres also have more housing debt both in absolute terms and relative to their income. In the long term, the mutually reinforcing cycles and vulnerabilities in housing and credit markets could turn out to be detrimental to financial stability and the macroeconomy.