Macroprudential decision: Countercyclical capital buffer requirement and housing loan cap remain unchanged, credit institutions’ risk weight floor discontinued


The Board of Financial Supervisory Authority (FIN-FSA) will not impose a countercyclical capital buffer (CCyB) requirement on banks and other credit institutions. The maximum LTC ratio, i.e. loan cap, will be maintained at its statutory standard level of 90% (first-home loans 95 %), to which it was restored in summer 2020. The decisions support conditions for economic growth. The FIN-FSA Board will not extend the validity of the risk weight floor, which entered into force in 2018.

“The effects of the coronavirus pandemic on the real economy and financial markets have been significant. It is important to support conditions for economic growth and thus promote stability without jeopardising longer-term stability,” says Marja Nykänen, Chairman of the FIN-FSA Board.

Due to the exceptional situation caused by the coronavirus pandemic, the FIN-FSA Board will place greater emphasis on the cyclical development of the economy and the financial system in its future decision-making on macroprudential instruments. In decisions on the dimensioning of structural macroprudential instruments, the aim is to ensure that their dimensioning supports the recovery of the economy and the financial system in a sustainable manner.

Countercyclical capital buffer requirement and loan cap maintained at standard level

In April 2020, the FIN-FSA Board eased credit institutions’ structural capital requirements and, in June 2020, restored the maximum LTC ratio (i.e. loan cap) for residential mortgage loans other than first-home loans to its statutory standard level of 90%.

Based on the available indicator and statistical data, there are no signs that the credit cycle will overheat in the near future.

This, together with the weak economic outlook, supports maintaining the CCyB rate at 0%. The uncertain economic outlook for the economy and the housing market also support maintaining maximum LTC ratios at their standard levels under the Credit Institutions Act, namely at 95% for first-home loans and 90% for other than first-home loans.

“In the current uncertain situation, careful assessment of borrowers’ ability to pay is important. The FIN-FSA Board urges lenders to exercise restraint in granting loans that are very large in relation to the applicant’s income and have a longer maximum repayment period than usual,” emphasises Nykänen.

Risk weight floor for housing loans discontinued

On 27 June 2017, the FIN-FSA Board decided to set a minimum risk weight level of 15% for residential mortgage loans applicable to credit institutions that have adopted the Internal Ratings Based Approach for the calculation of capital requirements. The decision entered into force from the beginning of 2018. The size of the risk weight determines the amount of own funds that a credit institution must hold on its balance sheet to hedge against credit losses from residential mortgages. 

The macroprudential significance of the risk weight floor has declined and will continue to decline a result of microprudential measures and regulatory changes. At present, Finnish banks’ average risk weights on residential mortgage loans exceed the 15% limit. The FIN-FSA Board therefore does not consider it necessary to extend the validity of the risk weight floor. The current risk weight floor requirement expires on 1 January 2021.

The Board of the Financial Supervisory Authority assesses quarterly the short- and long-term risks to the stability of Finland’s financial system. If necessary, the Board may tighten or relax the so-called macroprudential instruments, which promote stability. The Board decides quarterly on the levels of the countercyclical capital buffer (CCyB) and the maximum loan-to-collateral (LTC) ratio. The levels of the systemic risk buffer and the additional capital requirements for nationally systemically important institutions (O-SII buffers) are reviewed annually.


  • Board’s decision on the application of macroprudential instruments (pdf)
  • Proposal of the Director General of the FIN-FSA, circulated for comment, on the application of macroprudential instruments (in Finnish, pdf)
  • Opinions on the Director General’s proposal on the application of macroprudential instruments (in Finnish, pdf)
    • Bank of Finland
    • Ministry of Finance
    • Ministry of Social Affairs and Health

See also

  • Macroprudential decisions
  • Description of macroprudential instruments



Marja Nykänen, Chair of the Board of the Financial Supervisory Authority, tel. +358 9 183 2007

About Finanssivalvonta

PL 103, Snellmaninkatu 6
00100 Helsinki

09 183 51

Finanssivalvonta, or the Financial Supervisory Authority (FIN-FSA), is the authority for supervision of Finland’s financial and insurance sectors. The entities supervised by the authority include banks, insurance and pension companies as well as other companies operating in the insurance sector, investment firms, fund management companies and the Helsinki Stock Exchange. We foster financial stability and confidence in the financial markets and enhance protection for customers, investors and the insured.

Subscribe to releases from Finanssivalvonta

Subscribe to all the latest releases from Finanssivalvonta by registering your e-mail address below. You can unsubscribe at any time.

Latest releases from Finanssivalvonta

Virtuella valutor får marknadsföras i Finland endast av här registrerade aktörer24.11.2021 12:45:00 EET | Tiedote

Marknadsföringen av virtuella valutor och tjänster i anslutning till dem har ökat i finländsk media och i gatubilden. Finansinspektionen vill påminna om att endast registrerade tillhandahållare av virtuella valutor får marknadsföra virtuella valutor och tjänster i anslutning till dem i Finland. Det är viktigt att också de som säljer annonsutrymme är medvetna om denna registreringsskyldighet.

FIN-FSA conference: EU financial markets today and in the future2.11.2021 09:20:00 EET | Press release

The COVID-19 pandemic has impacted the economy and financial sector worldwide and also accelerated transformation trends in financial services. The most prominent of these is digitalisation. This is bringing greater efficiency to activities in the sector and spurring innovation, but is also ushering in new kinds of risks. The financial sector has become one of the world's biggest targets for cyber attacks. The need for action to combat climate change has not diminished during the pandemic either. The financial sector must take into account more actively the effects of climate change, not only in relation to its business models but also concerning the risks of its clients.

Finansinspektionens konferens: EU:s finansmarknad nu och i framtiden2.11.2021 09:20:00 EET | Tiedote

Coronapandemin har påverkat ekonomin och den finansiella sektorn globalt och samtidigt förstärkt förändringstrenderna i den finansiella sektorn. Mest framträdande är digitaliseringen, som effektiviserar sektorns verksamhet och främjar innovationer, men som också för med sig nya risker: den finansiella sektorn är de facto en av de sektorer som varit mest utsatt för cyberangrepp globalt. Behovet av åtgärder för att bekämpa klimatförändringen har inte heller minskat under pandemin, och den finansiella sektorn måste därför mer aktivt ta hänsyn till effekterna av klimatförändringen för såväl sin egen verksamhet som för kundernas risker.

Finanssivalvonnan konferenssi: EU:n finanssimarkkinat nyt ja tulevaisuudessa2.11.2021 09:20:00 EET | Tiedote

Koronapandemia on vaikuttanut talouteen ja finanssisektoriin maailmanlaajuisesti ja on myös vahvistanut finanssisektorin muutostrendejä. Näistä näkyvin on digitalisaatio, joka tehostaa finanssisektorin toimintaa ja edistää innovaatioita mutta tuo myös mukanaan uudenlaisia riskejä: finanssisektori onkin ollut yksi merkittävimmistä kyberhyökkäysten kohteista maailmanlaajuisesti. Myöskään tarve ilmastonmuutosta torjuviin toimiin ei ole vähentynyt pandemian aikana ja finanssisektorin tuleekin huomioida aiempaa aktiivisemmin ilmastonmuutoksen vaikutukset niin omaan liiketoimintaansa kuin asiakkaidensa riskeihin.

In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.

Visit our pressroom