Macroprudential decision: National buffer requirements for banks and the housing loan cap to remain unchanged
Press release 27 June 2025
Macroprudential decision: National buffer requirements for banks and the housing loan cap to remain unchanged
National systemic risk buffer (SyRB) for banks (1.0%) and O-SII buffer rates (0.5–2.5%) unchanged; countercyclical capital buffer requirement (CCyB) for banks also remains at zero. In addition, the housing loan cap stays at its standard level. The Board of the Financial Supervisory Authority (FIN-FSA Board) made these decisions in its meeting on 26 June 2025. The decision is based on analysis which did not indicate factors jeopardising financial stability in such a way that warrants tightening of the capital requirements or the loan cap.
Global economic growth strengthened in 2024, but in the course of this year, the United States’ trade policy and geopolitical tensions have caused significant uncertainty, overshadowing the prospects of the international and euro area economy. According to the Bank of Finland’s June forecast, the Finnish economy is slowly recovering from the recession. The Finnish GDP is projected to grow 0.5% in 2025 and 1.5% in 2026. However, downside risks are elevated.
Housing loan cap remains at its standard level
The prospects of the housing market remain uncertain. Housing sales picked up in the second half of 2024 and January–May 2025, but housing prices have continued to decline slightly and residential construction remains limited. Vulnerabilities related to household indebtedness have eased somewhat as new borrowing by households has been limited, and debt relative to income has decreased.
Mortgage lending does not demonstrate any exceptional growth in financial stability risks in such a way that would warrant a reduction of the housing loan cap, or the maximum LTC ratio. Hence, the housing loan cap remains at its standard level, which is 95% for loans for first-home loans and 90% for other new housing loans.
National buffer requirements for banks to remain unchanged
The justification for setting a systemic risk buffer is to limit risks with a negative impact on financial stability or the real economy. Structural vulnerabilities in the Finnish credit institution sector have remained largely at the same level from March 2023, when the decision was made to set an SyRB at the rate of 1.0%. This supports keeping the requirement unchanged.
“The Finnish credit institution sector continues to involve many structural vulnerabilities. These vulnerabilities emphasise the need for banks’ adequate capitalisation, which is partly ensured by the SyRB”, states Marja Nykänen, Chair of the Board.
The FIN-FSA has reviewed the buffer rates for other systemically important institutions (O-SIIs) set on 26 June 2024 as required by law. The review did not indicate any grounds to adjust these capital requirements, so they were kept unchanged:
- Nordea Bank Abp 2.5%
- OP Financial Group 1.5%
- Municipality Finance Plc 0.5%
The financial cycle has remained sluggish, and the core risk indicators for the CCyB do not point to any clear turnaround. The primary risk indicator for this requirement, i.e. deviation of the private sector credit-to-GDP ratio from its long-term trend, declined quarter-on-quarter and remained deeply negative (-16.9 percentage points) in the first quarter of 2025. Since supplementary risk indicators do not point to any significant increase in cyclical stability risks associated with total lending, either, the Board decided to keep the CCyB at its standard level (0.0%).
In September 2024, the Norwegian macroprudential authority (Finansdepartementet) notified Finnish and other EEA authorities that it had updated its decision to set an SyRB for banks, and it requested the reciprocation of the measure with respect to banks registered in EEA countries and operating in Norway. In its meeting, with a view to the new justifications, the FIN-FSA Board approved the reciprocation of the requirement in full (4.5%) for Finnish banks. The requirement enters into force on 1 October 2025.
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)
- The FIN-FSA Board’s decision on a systemic risk buffer and a buffer for other systemically important institutions (pdf)
- Memorandum: Basis for setting a systemic risk buffer, values of related indicators and information to be provided on the decision
- Principles for identifying other systemically important credit institutions (O-SIIs) and for setting their capital buffer requirements
- The FIN-FSA Board’s decision on the reciprocation of a systemic risk buffer based on the structural characteristics of the Norwegian financial system (pdf)
- Proposal of the Director General of the FIN-FSA, circulated for comment, on the application of macroprudential instruments (pdf, in Finnish)
- Proposal of the Director General of the FIN-FSA, circulated for comment, on a systemic risk buffer, a buffer for other systemically important institutions as well as on the reciprocation of a Norwegian systemic risk buffer (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
- Opinions on the Director General’s proposal on a systemic risk buffer, a buffer for other systemically important institutions as well as on the reciprocation of a Norwegian systemic risk buffer (pdf, in Finnish)
- Bank of Finland
- Ministry of Finance
- Ministry of Social Affairs and Health
- Macroprudential report 1/2025 (in Finnish)
Contacts
- Media phone service number, +358 9 183 5030