Loan ceiling remains at 85%, no change in banks’ countercyclical capital buffer requirement


24.9.2021 09:30:01 EEST | Finanssivalvonta | Investor News

Press release September 24, 2021

Macroprudential decision: loan ceiling remains at 85%, no change in banks’ countercyclical capital buffer requirement

The Board of the Financial Supervisory Authority (FIN-FSA) has decided to keep the counter-cyclical capital buffer (CCyB) requirement for banks unchanged at its standard level and to extend the validity period of the decision to a Stricter credit limit, i.e. the loan-to-guarantee ratio (LTC) limit. The loan limit was tightened in June by lowering the maximum LTC ratio for new residential mortgages other than first-time home loans by 5 percentage points to 85%.

“Although the outlook for the Finnish economy is favorable, the COVID-19 pandemic continues to overshadow global economic developments, thus prolonging uncertainty regarding the financial system. High household debt is a structural concern that has been further exacerbated by the fact that large and longer-than-usual home loans have become more common during the pandemic, ”says Marja Nykänen, chairman of the board of directors of FIN-FSA.

The level of household debt increased during the pandemic, in part due to the growth in home loans. In the current situation, it is important that lenders continue to carefully assess borrowers ‘ability to pay and exercise restraint in granting loans that are large in relation to borrowers’ income and having a repayment period longer than d. ‘habit.

Banks’ countercyclical capital buffer requirement will remain unchanged

The board of directors of FIN-FSA has decided to maintain the rate of CCyB at 0.0%. The main risk indicator for setting the CCyB requirement – the private sector credit-to-GDP gap – remained low. Additional risk indicators and metrics also suggest that there is no clear sign of such a build-up of cyclical risk that would require a higher CCyB level.

The board of the financial supervisory authority assesses the short- and long-term risks to the stability of the Finnish financial system on a quarterly basis. Where appropriate, the Council can tighten or relax macroprudential instruments, which promote stability. The Board decides on a quarterly basis on the levels of the counter-cyclical capital buffer requirement (CCyB) and the maximum loan-to-guarantee ratio (LTC) for home loans. The levels of additional capital requirements for national systemically important institutions (O-SII buffers) are reviewed at least annually and the level of the systemic risk buffer at least every two years.

For more information, please contact:

Marja Nykänen, Chairman of the Board of the Financial Supervisory Authority, tel. +358 9 183 2007

Click on this link to access the annexes listed below

  • Council decision on the application of macroprudential instruments (pdf)

  • Proposal by the Director General of FIN-FSA, circulated for comments, on the application of macroprudential instruments (pdf, in Finnish)

  • Opinion on the proposal of the Director General on the application of macroprudential instruments (pdf, in Finnish)

    • Bank of Finland

    • Ministry of Finance

    • Ministry of Social Affairs and Health


  • Number of the media telephone service, reachable on weekdays from 9 to 16, except Maundy Thursday and New Year’s Eve from 9 to 13, +358 9 183 5030

About Finanssivalvonta

Finanssivalvonta, or Financial Supervisory Authority (FIN-FSA), is the supervisory authority for the finance and insurance industries in Finland. Entities supervised by the authority include banks, insurance and pension companies as well as other companies operating in the insurance sector, investment companies, fund management companies and the Helsinki Stock Exchange . We promote financial stability and confidence in financial markets and improve protection for clients, investors and policyholders.

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FIN-FSA – Financial Supervisory Authority published this content on September 24, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on September 24, 2021 06:41:04 AM UTC.

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