An "exceptionally high" number of mortgages were approved at the end of last year, according to the Bank of Finland.
In December, loans were drawn down for a total amount of 1.9 billion euros, which was 460 million euros more than in December of the previous year and represents the largest number ever recorded for the month, the Bank said in a statement issued Monday.
At the same time, the average interest rate on new loans fell to a record low of 0.69 percent.
Juhana Brotherus, Chief Economist with the Mortgage Society of Finland (Hypo) told Yle News that the announcement of a coronavirus vaccine towards the end of last year had a significant impact on the housing market.
"There was immediate movement in the stock market after Pfizer-BioNTech released their results and consumers in the housing market acted quickly too," Brotherus said. "The Finnish economy has stayed relatively resilient and a lot of consumers have accumulated savings during the crisis, as travelling and cultural expenses are close to zero."
In addition to this, growth was also boosted by the suspension of loan repayments offered by lenders during the coronavirus spring, which were taken up by many customers.
Trend set to continue
From September to December last year, the number of mortgages being drawn down increased by more than 13 percent compared to the same period in 2019, while figures for the full year show that the total amount borrowed was 20.4 billion euros, or 4.5 percent more than in 2019.
Brotherus added that this uptick is likely to continue over the coming months.
"The trend we saw at the end of 2020 will continue in 2021 unless there is some negative surprise in vaccinations or the virus itself. There is reason to be optimistic about the housing market in the growth centres, and these figures support the positive view of life returning to normal," he said, referring to the "growth triangle" of Helsinki-Tampere-Turku where populations have been steadily increasing for a number of years.
Mortgage repayment periods getting longer
The Bank of Finland statement also revealed that mortgage repayment periods have continued to lengthen. In December, the average repayment period for new loans was 21.5 years.
The share of mortgages with longer repayment periods (more than 29 years) had also increased, accounting for 12 percent of all loans in December, the Bank noted, which was up from just under seven percent in December 2019.
The stock of Finnish households' deposits also increased by 3.3 percent compared to the same period of 2019, to stand at 103.6 billion euros.