Macroprudential decision: Residential mortgage loan cap and countercyclical capital buffer unchanged


The Board of the Financial Supervisory Authority (FIN-FSA) has decided to keep the loan cap for residential mortgage loans other than first-home loans unchanged at 85% to curb risks associated with household indebtedness. The Board will not impose on banks and other credit institutions a countercyclical capital buffer as there are no signs of overheating in the development of the loan stock.

“Although the cyclical and structural risks to Finland’s financial stability have not significantly changed, Finland also needs to be prepared for a possible increase in systemic risks related to lending and the housing market in the future.At the same time, it is justified to assess the need for new macroprudential instruments, in accordance with the proposals of the working group established by the Ministry of Finance,” emphasises Marja Nykänen, Chair of the FIN-FSA Board.

Countercyclical capital buffer (CCyB) will not be imposed on banks and other credit institutions

The economic upswing in Finland has passed and economic growth is slowing temporarily in line with the rest of the world.Consumer confidence as well as expectations for the employment situation have deteriorated, while the still fragile state of the euro area economy and global economic uncertainties, such as trade disputes, Brexit and the problems of the Chinese economy, are overshadowing Finland’s economic outlook.

There are no signs of overheating in the development of the loan stock that would support the imposition of a CCyB on banks and other credit institutions.The latest value of the domestic private sector credit-to-GDP gap, used as the primary risk indicator for setting the CCyB, is -10.2 percentage points, which gives a CCyB guideline value of 0.0%.

Loan cap for other than first-home buyers remains at 85%

The longer-term structural vulnerabilities of the Finnish financial system have remained high.Household indebtedness is being further increased by housing corporation loans for new homes and by consumer credit.Residential mortgage lending and sales of old homes picked up in summer 2019.Interest margins on residential mortgage loans have narrowed and very long-term mortgage loans have become common.

Construction has declined, which has slowed down the growth in the stock of housing corporation loans.Although growth in indebtedness has recently been slower than before, household indebtedness relative to annual disposable income remains close to the record high level and stood at 128% in the second quarter of 2019.To curb systemic risks associated with high household indebtedness, it is still justified to maintain the maximum LTC ratio for residential mortgage loans other than first-home loans at 85%, in line with the earlier decision of the Board of the FIN-FSA.

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 requirement and the maximum 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 (pdf, in Finnish)
  • Opinions on the Director General’s proposal on the application of macroprudential instruments (pdf, in Finnish)
    • Bank of Finland
    • Ministry of Finance
    • Ministry of Social Affairs and Health
  • Macroprudential report 2/2019: Winter (in Finnish)



For further information, please contact:

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

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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.

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