Abundant construction in the Helsinki metropolitan area has put a brake on apartment prices.

The current loan-to-value cap on housing loans urgently needs to be accompanied by a new, more comprehensive cap on debt. This would take into account all a loan applicant’s debt relative to their income.

An extensive materialisation of risks on the Swedish housing market could also have notable effects in the other Nordic countries.

Low risk premia and high valuations have increased global securities markets’ exposure to price corrections and abrupt shifts in risk premia.

Housing debt has grown, both in absolute terms and relative to income, especially in growth centres, where housing is more expensive and subject to greater pressures from demand than elsewhere.

When indebted households cut their spending during an economic downturn, this also increase the financial difficulties of non-financial corporations.

House prices in the Helsinki Metropolitan Area have long been rising faster than in the rest of Finland. Developments have been influenced by regulatory controls and the low interest rates on housing loans.

Mortgage lending can be reined in by setting higher risk weights for loans. There are, however, differences in calculation methods. Harmonisation would enhance a level playing field between banks.