A stable, well-functioning financial market for allA stable, well-functioning financial market for allBorrower-based measures following high inflation and rising interest rates
Changing or pausing the amortisation requirements is not an accurate or appropriate measure for helping the households with the greatest need for financial support to handle their higher costs. This is the conclusion of FI’s evaluation of how the amortisation requirements impact households with lower incomes and small margins in today’s difficult economy.
At the beginning of September, the Government assigned FI the task of evaluating the impact of implemented borrower-based measures: specifically, the mortgage cap and two amortisation requirements. The assignment clarifies that the evaluation should focus on the impact of the measures in the current economic developments of high inflation and rising interest rates and in particular their impact on households with lower incomes and small financial margins.
The conclusion in the report is that changing the rules for amortisation would not result in accurate support for the households that risk serious financial difficulties due to high electricity bills or increases in other expenses. In order to provide these households with effective support, targeted fiscal policy measures are needed.
Individual mortgage holders could also be hit hard by economic developments going forward. According to the current regulations, banks are able to grant temporary exemption from the amortisation requirements given special grounds. These grounds exist for mortgagors who are facing significant changes in their circumstances that lead to financial difficulties. Therefore, in the report we clarify that unexpectedly high costs, for example as a result of high electricity bills, can fall under this type of changed circumstances. Through this arrangement, the help that mortgagors receive to bridge their financial difficulties can be more targeted.
Exceptional economic conditions may create grounds on which to temporarily change the amortisation requirements. FI made such a change at the beginning of the pandemic. However, the current state of the economy is significantly different than that of the spring of 2020. Economic forecasts may be negative and the outlooks uncertain, but they are nowhere near as negative as at the beginning of the pandemic. Also, easing the amortisation requirements now would go against current monetary policy. Therefore, FI does not view a temporary general exemption from the amortisation requirements to be a well balanced measure at this point in time.
