Finns increasingly fear home loans and housing costs, survey finds

Finns are increasingly anxious about housing costs and home loans, according to a S-Pankki survey. Fifty-four percent of respondents cited housing expenses as their biggest concern, an 18 percentage point jump from the previous year. Additionally, 44% view their home loan as a risk, an 11 percentage point increase.

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There is only about a nine-month difference between the surveys, and yet it is quite a significant change.

Janne Ronkanen, an economist at S-Pankki, noted the significant shift in consumer sentiment within just nine months. He linked this pessimism to the broader economic landscape, including rising interest rates and geopolitical events like the Middle East crisis, which influences interest rate outlooks.

Despite concerns about rising rates, only about a fifth of Finns are directly worried about interest rate hikes. The survey reveals a general, undefined sense of uncertainty rather than specific anxieties about loan details. This uncertainty is leading to increased saving and preparation for the future.

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It reflects everything that has happened in the general economic environment and the fact that interest rates have started to rise.

The housing market is experiencing a significant downturn, with price drops described as unusually large and prolonged, comparable to the recession of the 1990s. Ronkanen stated it's impossible to predict the market's bottom but noted current prices are exceptionally low. Banks are now offering up to 40-year mortgage terms, a change from the previous 30-year limit, which may support the housing market but could also encourage overly large loans. Ronkanen advised caution, urging borrowers to make sensible choices regarding loan terms to avoid financial strain.

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That is currently the one big thing that determines everything – including Finns' housing plans, as it is reflected in interest rate outlooks.

When asked about a single factor that could boost consumer spending, Ronkanen suggested a resolution to the war in Ukraine would be key. The survey, conducted by Kantar Finland, included over 3,000 adults and took place from April 6-22.

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The decline in housing prices is exceptionally large and has lasted a long time. The downward trend is as long as in the 1990s recession.