The rapid rise in house prices has increased the risks on the housing markets of the other Nordic countries. The risks from Sweden’s housing market and growing household debt can very easily spread to Finland.
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Housing and real estate trading has continued despite the economic uncertainty. The rapid rise in prices and lending growth are increasing the vulnerabilities of Nordic banks.
COVID-19 has ravaged the banks less than feared. Growth in non-performing loans would weaken banks’ ability to extend credit. A number of methods have been suggested to reduce the number of non-performing loans.
The coronavirus pandemic has the potential to aggravate long-standing vulnerabilities in the Nordic housing market. Housing market disturbances can increase credit risk for banks and interfere with their access to funding.
Foreign investment in the Finnish and other Nordic property markets has increased. As a consequence the Finnish market is more vulnerable to external risks.