During the coronavirus pandemic, many families grappled with a new reality of sharing homes full-time for work and school, while normal vacation travel was difficult due to restrictions on transport, hotels and restaurants. As a result, Finnish households took out a record volume of loans to buy summer cottages and other holiday homes, whose prices soared.
That boom in holiday home sales seems to have ended, based on data released by the Bank of Finland on Monday. It reported that Finnish households took out 30 percent less in so-called cottage loans in June than a year earlier.
The central bank said last month that people in Finland took out around 88 million euros in what it calls holiday cottage loans. That was down by some 30 percent from the corresponding figure in June 2022, when about 125 million euros' worth of such loans were drawn down.
An exceptional number of cottage loans were taken out in 2020 and 2021 during the coronavirus pandemic. This June's borrowing figure was six percent lower than in June 2019, the year before the pandemic.
The majority of holiday cottage loans are drawn down during the summer months, the bank said.
Interest rates up
Interest rates for such loans are on the rise, up to an average of 4.6 percent in June. That figure was only slightly up from May but 2.88 percentage points higher than a year earlier. Nearly all holiday cottage loans are linked to Euribor rates, which have risen steadily.
The average repayment period for new cottage loans was 18 years and 11 months, slightly shorter than a year earlier.
One cabin per 9 residents of Finland
At the end of June, Finnish households owed 4.5 billion euros in such loans. That marked an exceptional year-on-year contraction of 1.4 percent, in contrast to an annual growth of 6.7 percent a year earlier.
According to Statistics Finland, at the end of last year, there were 510,000 summer cottages in Finland, or roughly one per nine inhabitants.