Macroprudential decision: Housing loan cap and countercyclical capital buffer requirement for banks to remain unchanged
Press release 30 September 2025
Macroprudential decision: Housing loan cap and countercyclical capital buffer requirement for banks to remain unchanged
FIN-FSA Board keeps the housing loan cap at its standard level of 90%. The cap for first-home loans also remains unchanged, at 95%. Moreover, the Board decided to keep the countercyclical capital buffer (CCyB) requirement for banks at 0.0% and adopted credit risk weight floors set by the Norwegian macroprudential authority for Finnish credit institutions’ certain exposures in Norway.
The Finnish economy saw positive growth in 2024, but growth has weakened into 2025. Early in the year, economic growth was slowed, among other things, by contracting private consumption, but investment growth has turned positive after the end of 2024. Nevertheless, residential and other construction remain sluggish and consumer confidence is weak. The Bank of Finland's interim September 2025 forecast predicts economic growth of 0.3% for this year. The unemployment rate is forecast to remain high in the following years.
Housing loan cap remains at its statutory standard level
Gradual recovery of the housing market has continued. The sales of old dwellings have picked up gradually this year, which has lead to an increase in new housing loan drawdowns compared with the two previous years. The euro volume of new buy-to-let mortgage loans has increased more in relative terms than owner-occupied mortgage loans. However, the demand for housing has remained sluggish overall relative to the supply on the market. This has kept housing prices mainly subdued across the country and prolonged the downswing of new-build construction in particular.
Vulnerabilities related to household indebtedness have eased somewhat recently. Aggregate household debt and the housing loan stock have declined since 2022 relative to growing nominal income. Lending is estimated to recover over the following years, and the volume of debt relative to income is not expected to grow materially from current levels in the short term.
- Household borrowing has remained moderate. However, high indebtedness involves structural vulnerabilities, and we continue to monitor their development closely, states Marja Nykänen, Chair of the Board.
The housing loan cap, i.e. maximum loan-to-collateral value, remains at its statutory standard level of 90%. The cap for first-home loans also remains unchanged at 95%.
Banks’ countercyclical capital buffer requirement to remain unchanged
Based on developments in the core risk indicators for the CCyB, there are no signs of an upturn in the financial cycle. In the first quarter, the value of the primary risk indicator, i.e. deviation of the private sector credit-to-GDP ratio from its long-term trend, was -16.9 percentage points.
Total lending remained sluggish in the first quarter of 2025, and credit stocks have contracted except for loans to housing corporations. Supplementary risk indicators do not point to any significant increase in the cyclical stability risks associated with total lending, either. Therefore, there are no grounds to apply a countercyclical capital buffer requirement at present.
The Norwegian macroprudential authority (Finansdepartementet) has decided to extend the validity of the bank-specific minimum risk weights (risk weight floors) applicable to the residential and commercial real estate exposures of credit institutions applying so-called IRB approaches until the end of 2026 to the effect that the risk weight floor for residential real estate credit is raised to 25% and the risk weight floor for commercial real estate credit is kept unchanged at 35%. At its meeting, the FIN-FSA Board decided to reciprocate the risk weight floors set by the Norwegian macroprudential authority to apply to Finnish credit institutions’ exposures in Norway. The risk weight floor for commercial real estate credit enters into force immediately, while the raised risk weight floor for residential real estate credit takes effect on 1 January 2026.
The Board of the Financial Supervisory Authority assesses on a quarterly basis the short and long-term risks to the stability of Finland’s financial system. If necessary, the Board may tighten or relax its macroprudential instruments for promoting stability. The Board decides on a quarterly basis the level of the countercyclical capital buffer (CCyB) and the level of the maximum loan-to-collateral (LTC) ratio for housing loans. The levels of additional capital requirements for nationally systemically important institutions (O-SII buffers) are reviewed at least annually and the level of the systemic risk buffer (SyRB) at least every second year.
For further information, please contact:
Marja Nykänen, Chair of the Board of the Financial Supervisory Authority, tel. +358 9 183 2007
View this link to access the appendices listed below
- The FIN-FSA 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 concerning 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
Contacts
- Media phone service number, +358 9 183 5030