Macroprudential decision: Housing loan cap and countercyclical capital buffer requirement for banks to remain unchanged
Press release 26 March 2026
Macroprudential decision: Housing loan cap and countercyclical capital buffer requirement for banks to remain unchanged
The FIN-FSA Board keeps the housing loan cap at its standard level of 90% and the cap for first-home loans at 95%. The Board also retains the countercyclical capital buffer (CCyB) requirement for banks at 0.0%. The FIN-FSA Board is closely monitoring the impact of the Middle East conflict on the stability of the Finnish financial system.
The prospects for global trade and the world economy are overshadowed by geopolitical uncertainties that have increased significantly due to the conflict in the Middle East. The euro area economy has grown slowly, and global uncertainty is also weakening growth prospects for the coming years. Finland's economic development has continued to be sluggish, although gross domestic product began a gentle upturn toward the end of 2025 according to available data. Domestic economic growth has been restrained in particular by subdued private consumption and reduced public demand due to fiscal consolidation measures.
The FIN-FSA Board is closely monitoring developments in the Middle East conflict and the associated risks, as well as their impact on the stability of the Finnish financial system. In the prevailing uncertain situation, it is paramount that risks are adequately cushioned with appropriate capital and liquidity buffers. Thanks to its risk resilience strengthened by macroprudential instruments, the Finnish financial system is well placed to withstand the negative market and economic effects caused by the conflict.
The housing loan cap remains unchanged at its statutory standard level
The state of the housing market and its outlook have remained largely unchanged from the previous quarter. The recovery of the housing market has been slow. Transaction volumes of existing dwellings have gradually increased and are approaching the levels seen in the years prior to the pandemic. The relative weakness of demand is reflected in declining house prices and low levels of new-build construction.
- The housing market is expected to continue strengthening slowly over the coming years. However, the outlook is clouded by geopolitical uncertainties and other threats facing the domestic economy, states Marja Nykänen, Chair of the Board.
On the FIN-FSA's horizon, there are no such factors that directly jeopardise the stability of the financial system or the economy and necessitate tightening the maximum loan-to-collateral ratio. The housing loan cap, i.e. the maximum loan-to-collateral ratio, remains at its statutory standard level of 90%. The cap applicable to loans taken out for the purchase of a first home also remains unchanged at 95%.
CCyB for banks stays at 0.0%
Developments in the core risk indicators for the CCyB in the third quarter of last year continue to indicate a subdued financial cycle. The primary risk indicator, i.e. the deviation of the private sector credit-to-GDP ratio from its long-term trend, stood at -18.0 percentage points as measured by a broad definition of the credit stock. The development of total lending remained sluggish. The household credit stock relative to GDP contracted marginally in the third quarter, and the private sector’s relative credit stock remained unchanged. However, the absolute values of corporate and household loan stocks have turned to modest growth.
The other core risk indicators do not point to an increase in cyclical systemic risks stemming from an overheating of the credit cycle, either, so there is no reason to raise the CCyB for banks. The decline in real house prices has continued, albeit somewhat moderated. The decline in average interest rates on new loans has levelled off, and there have been no significant changes in the pricing of risks.
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