Imposing a loan-to-value limit on housing company loans would only affect a share of construction finance

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Title: Imposing a loan-to-value limit on housing company loans would only affect a share of construction finance
Author: Koskinen, Kimmo ; Voutilainen, Ville
Organization: Bank of Finland
Series: Bank of Finland. Bulletin
Series volume: 95
Series number: 1/2021
Year of publication: 2021
Publication date: 4.5.2021
Pages: 53-60
Subject (yso): lainat (rahasumma); velkaantuminen; kotitaloudet (organisaatiot); asuntolainat; rakentaminen
Keywords: korona; COVID-19; Suomi; taloyhtiölainat; enimmäisluotto-osuus
Other keywords: construction; indebtedness; housing company loans; debt accumulation
Abstract: Housing company loans are contributing to household indebtedness and are changing the composition of household debt. Housing company loans can also incentivise residential property investors to become highly leveraged. Imposing a loan-to-value limit of 60% on housing company loans would mitigate the issues associated with large housing company loans and make it easier to assess their risks. The impact of a loan-to-value limit would largely fall on owner-occupied housing output. Housing company loans are generally not used to finance the construction of rental housing. Imposing a loan-to-value limit on housing company loans might increase the number of pre-sales required by small construction companies or raise their borrowing costs.
Note: The accessible version: https://www.bofbulletin.fi/en/2021/1/imposing-a-loan-to-value-limit-on-housing-company-loans-would-only-affect-a-share-of-construction-finance/
Link: http://www.bofbulletin.fi/
Rights: https://helda.helsinki.fi/bof/copyright


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