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Housing Loan Market Growth Is Supported By Property Values And New Borrowers

The number of transactions at the Tallinn apartment market is high and on an upward trend; also, the transaction prices are rising. The vast number of transactions and other positive trends of property market are to a large extent backed by the loan market. The turnover of housing loans is thriving upon low interest rate and this gives more and more people an opportunity to buy a home with a housing loan.

The number of apartment transactions is showing a strong increase

The number of apartment transactions in Tallinn is robustly growing. In Q1 2017, 2,449 apartment ownership deals were signed in Tallinn. This corresponds to an annual growth of 19%. The number of transactions has gone up in terms of home buyers as well as rental investors. Demand has been supported by rising wages, high employment rate, but also favourable loan conditions and low interest rate.
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Statistics: For an average apartment in Harju County, 7.4 years’ mean wages have to be paid

In an Estonian average, 5.7 years’ mean net wages have to be paid on a transaction with an apartment. In Harju County, wages are higher; however, real estate there is also the most expensive. As a result, far more – 7.4 years’ wages – has to be paid on an average transaction with an apartment in the capital and its vicinity.

On an average transaction with an apartment, sellers of real estate charge 5.8 years’ wages in Tartu County and 4.1 years’ wages in Pärnu County. (more…)

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Statistics: There are 159,411 residential mortgage loans in Estonia

The average residential mortgage loan in Estonia fell to €36,802 in Q3 2013. However, the changes are not significant – the loan balance a year ago was just 1% bigger than today.

The average loan amount is decreasing mainly as a result of new residential mortgage loans. The total number of residential mortgage loans just a year ago was 157,600, but the relevant indicator at the end of Q3 2013 was 159,400. This shows an increase of 1.2%.

The main factor behind the increase in the number of residential mortgage loans is the interest rate, which has remained very low for a year now. The increase in average wages has supported the good impact of the low interest rate.

The fear of missing out on the price increase shared by home owners is also something that must be mentioned. The hope that the fast increase in apartment prices seen last year will also continue in the coming years is an increasingly more frequent reason for buying a home.

Balance and number of residential mortgage loans in Estonia under repayment

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Statistics: Residential development loan balance down by 17% in a year

According to the Bank of Estonia, the balance of loans granted for investment properties and development in Q3 2013 was €1.7 billion. This is 4.6% less than in the previous year.

The loan balance of retail property financing has decreased by 21% and the loan balance of residential development by 17%.

The decrease in the residential development loan balance is the result of the low new loan turnover. In Q3 2013 banks issued loans in the amount of €7.5 million for residential development, which is one of the lowest figures in recent years.

Balance of loans granted to non-financial companies by purpose graph

Turnover of loans granted to non-financial companies by purpose graph

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Statistics: Mortgage Interest Rate in Estonia at a Record Low

According to Tõnu Toompark’s Estonian property Adaur blog, morgage rates in Estonia have fallen to a level of 3.15 per cent at the end of the first quarter of 2012. The only other time when such a low level of domestic rates was reached was back in 2005, writes Tõnu

And whilst interest rate margins have steadily grown over the last year, the falling Euribor rate of European banks’ lending rates has contributed to the overall decline in Estonian banks’ interest rates.

The current prognosis would have it that a low Euribor looks in the offing, and as a result, continuing low interest rates, writes Tõnu.

Meanwhile loans to businesses stood at a rate of 4.17 per cent at the end of the first quarter of 2012, Tõnu goes on.

This is a translation for Tallinn Property and Goodson & Red Estonian property consultancy, and the original article (in Estonian) is available on Tõnu Toompark’s Estonian property Adaur blog here, complete with detailed graphs going back to 1998 and showing changes in Euribor rates, as well as interest rates within Estonia in Kroons and Euros (and also Deutschmarks since the Estonian Kroon was initially pegged to the German Mark after its inception in 1992) as well as the margin, i.e. the difference between the Euribor rate and the Estonian banks’ own interest rate.

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Tallinn Real Estate Market Report Third Quarter 2011

We have just been putting the finishing touches to a fresh copy of our quarterly review of the Tallinn property market and the review.

Our latest Tallinn Property and Rental Market Quarterly Review covers all developments in the third quarter of 2011, and as always the review contains a brief look at the Tallinn residential market:

  • situation regarding mortgage loans, consumer security
  • information on average asking and transactional prices
  • current state of the central Tallinn rental market
  • invaluable sample transactions
  • advice on rental business considerations

Get the Tallinn Property Market Review 2011 Q3

We would also very much like to hear your views re the property market. Or if you have any suggestions regarding topics. Please do not hesitate to write or tweet us, or leave us a comment below or on our Tallinn Property Facebook page.

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Statistics: No Change In Loans Interest Rates

Euro-based home loans rates have remained unchanged in the range of 3.2 to 3.4 per cent, despite small rises in the Euribor index of European lending rates since 2009, according to Tõnu Toompark on his adaur.ee blog. The monthly rate stood at 3.4 per cent for March, whilst the Euribor index over the same period was 1.5 per cent, writes Tõnu.

These small but persistent rises in the Euribor rate, when combined with falling lending rates by the banks themselves, mean that banks’ margins have been eroded somewhat.

Meanwhile the average interest rate for business loans stood at 4.47 per cent in March, Tõnu explains.

The original article (in Estonian) along with diagrams illustrating the chages in Home loan rates in both Estonian Kroons and Euros, and margins, is here.

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Tallinn Real Estate Market Report First Quarter 2011

Tallinn Property and Goodson & Red are pleased to announce that our latest Tallinn Property and Rental Market Quarterly Review is ready.

Covering all developments in the first quarter of 2011, as always the review contains an in-depth look at the Tallinn residential market, the situation regarding mortgage loans, information on average asking and transactional prices, the current state of the central Tallinn rental market, and also offers invaluable sample transactions and advice on rental business considerations.

In case the link above did not work you can copy and paste the following to your address bar: http://www.goodsonandred.com/sharedfolder/tallinn-property-market/marketreview-tallinn-real-estate-q1-2011-web180411.pdf  

The review comes at an exciting time for us as the company expands to include four highly experienced team members. You can meet our new property consultants and agents at Goodson & Red Property Consultancy site. Whatever your requirements for Tallinn property, Andrew, Kati, Tuuli and Erki are there to help you achieve your aims.

We would very much like to hear your views regarding the Tallinn or Estonian property market. Furthermore, if you have any suggestions regarding topics, please do not hesitate to leave your comment or tweet us, or write on our wall.

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ECB Rate Increase To 1.25%: Effects On Estonian Property Market

The European Central Bank (ECB)’s decision to raise the base lending rate to 1.25% on Thursday last (7th April) perhaps comes as no surprise, and it seems likely that further rises are due for the course of 2011.

Since many Estonians hold their mortgages in variable rate packages which follow the base rate, this means an increase in repayments (approximately 160 Euros per year, according to Baltic Business News, quoting business publication Äripäev).

However it needn’t mean that fixed lending rates in Estonian high street banks will go up just yet, since banks are prepared to absorb the increase in their margins. The current margin average is some two per cent (i.e. on top of the base rate) down from 2.4-2.6 per cent in 2009, but the all time typical margin stands at only 0.5 per cent. Therefore there is still plenty of room for a reduction of margins, rather than an increase in bank rates. This is significant in the rejuvenation of the Estonian property market after the recession of 2008-2010, since it means bank rates should remain at an affordable level for the meantime, and not act as a barrier to potential homeloan customers.

The increase in base rate is likely nevertheless to impact upwards on the Euribor index of average European banking interest rates.

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Tallinn Real Estate Market Report December 2010

To wrap-up 2010 and look ahead to 2011, please don’t hesitate to check our latest Tallinn Property and Rental Market Quarterly Review.

As always our review contains an in-depth look at the Tallinn residential market, the situation regarding mortgage loans, information on average asking and transactional prices, the current state of the central Tallinn rental market, and also offers invaluable sample transactions and advice on rental business considerations.

You can find the full report at: http://www.goodsonandred.com/sharedfolder/tallinn-property-market/marketreview-tallinn-real-estate-q4-2010_web151210.pdf

We would very much like to hear your views regarding the Tallinn or Estonian property market. Furthermore, if you have any suggestions regarding topics, please do not hesitate to leave your comment or tweet us, or write on our wall.

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