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.

The indebtedness of Finnish households relative to income has grown considerably since the turn of the millennium. A proportion of new residential mortgage holders have a heavy debt burden relative to their income.

Finnish households have a worrying level of debt. Advance measures should be taken to prevent the accumulation of excessive debt.

Regulatory reforms and macroprudential measures have improved the risk resilience of the bank-centred EU financial system. Work has also begun on targeting stability risks building up beyond the banking system.