More and more people dream at some stage in life of an apartment of their own. A Self-built house is a dream come true especially for young people. Suomalaisen Työn Liitto (The Association for Finnish Work) has carried out a study according to which 48% of people between 15 and 24 years of age dream of living in their own house.
Euribor rates are used as a reference in the pricing of various money market contracts and in Finland they are used as reference rate for housing loans. Currently mortgage interest rates are low, Euribor is on the negative and loans and the margins are very moderate, so it seems like dream-time take out a loan. Or is it?
The truth is that the 12-month Euribor can go well below zero without that it has no effect on the debtor’s purse. The Bank does not have to pay interest to the debtor. Economist Roger Wessman said last week in HS-analyysi that the goal in the economy is to find the interest rate level that borrowing would be more attractive than savings.
Even though interest rates are low and many people dream of their own house there is still a downside. Wages are not rising so much and taxes and other fees will keep the purchasing power low. Therefore the burden of the loan may grow even though interest rates are low.