Newsroom | Home loan applications surged over threefold in January 2024

Home loan applications surged over threefold in January 2024

In January, the number of home loan applications was over three times higher than in December, according to Bigbank Estonia's analysis of home loan portfolios. The number of loan agreements signed remained at the same level as December, and the average loan amount was similar to the previous months at €107,000.

Jonna Pechter, the head of Bigbank Estonia, attributed the main reason for the tripling of loan applications to the 1.65% margin offered by the bank. "However, such a leap indicates that homebuyers have not disappeared; interest in the product is high, and decisions often depend on the loan percentage," Pechter explained. She further stated that until the Euribor is lowered, the only way to stimulate the market is through the banks. "Although large universal banks should find it significantly easier to lower interest rates, they have so far actively held onto every fraction of their self-interest, leaving smaller players to lead the way again," described the head of Bigbank in the broader context of the home loan market.

Any good interest offer should apply to everyone regardless of the applicant's profession, the energy class of the home being purchased, or its exact location.
Jonna Pechter, head of Bigbank Estonia

Pechter considers it very important that any good interest offer applies to everyone regardless of the applicant's profession, the energy class of the home being purchased, or its exact location. "For example, a large portion of hardworking individuals today cannot afford to buy a home in a newly developed A-energy class area, even if they really want to, but they shouldn't be punished with higher interest rates because of it," emphasised Pechter, who also does not approve of costly additional obligations that come with favourable home loans at some banks. "Buying a home should be as simple as possible because a home is a home, and loan money is the same euro in every bank," Jonna Pechter is convinced.

One in four loan applications in January aimed to refinance existing loans, which, on the one hand, confirms people's desire and ability to deal with family finances, and on the other hand, indicates disappointment with the rigidity of their home banks. "However, it is always worth carefully calculating all the costs associated with changing contracts because a small change in margin may not necessarily bring benefits from changing banks," Jonna Pechter advised people not to rush into making major decisions too hastily.