The aim of the loan cap is to rein in household indebtedness and prevent housing price bubbles. Finland badly needs other instruments that can also restrict indebtedness.

The risks relating to high household indebtedness are realised when indebted households respond to the threat of payment difficulties by sharply reducing their consumption.

Structural changes in the banking sector may have an impact on risk spillovers between the Nordic countries.

A range of instruments could be deployed to restrain dangerous growth in lending for house purchase and household debt.