Estonian Central Bank Warns Real Estate Lenders ({{commentsTotal}})

"Apartments For Sale" Source: Photo: Postimees/Scanpix

The Bank of Estonia said today that commercial banks should continue to be cautious when giving loans.

Real estate price growth has been picking up in the last year, but unlike the last time - the so-called bubble before the recession - people have relied less on loans in buying properties.

The volume of housing loans in banks' portfolios has not changed significantly over the past year.

"Looking ahead, it's important that there not be the expectation that real estate continue its fast growth and the cautious attitude would continue in issuing housing loans," said the central bank in its latest overview.

It also noted that most of the risks to financial stability are low.

The most significant risks to financial stability are the impaired loan quality of Eurozone banks and risks of banking groups operating in Estonia in relation to Nordic real estate markets.

Bank assets are still under some stress from the past recession even though economic growth has now been in the black again, the central bank said.