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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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 Property Market Report Q3 2010

Just finished polishing our fresh report of housing and rental market in Tallinn.

Using partially the words from the preface of our review – participants in the economy have largely been communicating positive messages and making promising forecasts through the whole summer period. This obviously applies also to property markets. It seems likely that the market decline has indeed bottomed out. However, there are no reasons yet to feel too inspired, as there are still a host of macroeconomic factors which are deeply troubling. There is an overall degree of uncertainty in the market. Firstly, IMHO, it’s not wise to recover from a hang-over by taking another drink.

Real estate can be taken as a bunker instrument though :)

So, we believe that mortgage market might become slightly more active and interest rates stay at their current level; however, consumer security is subtle and we’ll probably see a decrease in the indicators. Therefore no increase in number of property transactions or prices, but uncertainty and risks may support the activity of the rental sector. The rental market has been quite active during in previous years as property purchases and sales were restricted due to a lack of financing. This may be one of the factors which will help to increase the rental sector in Estonia.

You can find the full report at http://www.goodsonandred.com/sharedfolder/tallinn-property-market/marketreview_tallinn-property-q3-2010_web240910.pdf

What do you think? Would very much like to read your thoughts and experiences. Or if you have any questions you’d like us to address, email, tweet us or leave us a comment below or on our Tallinn Property Page.

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