Estonian households continued to borrow enthusiastically in July, with demand for housing and consumer lows remaining high last month, the Bank of Estonia said on Friday.
"Households were again active in taking out new loans and leases in July," said Mari Tamm, economist at the Bank of Estonia, noting that the €111 million in new housing loans taken out last month marked an increase of 7% on year. "Annual growth in the portfolio was around 7%, as in previous months. The volume of new car leases was up 28% on year, and the portfolio as a whole increased by 21% over the year. Yearly growth in other loans to households remained fast at 8%."
Businesses increased their short-term borrowing above all in July. Around one third more money was taken in short-term loans from domestic banks and lease companies than in July 2017, but long-term borrowing tailed off somewhat as the same amount was taken as last year. The corporate loan and lease portfolio shrank somewhat in July, as borrowing by companies was restrained by their modest levels of investment and quite large own funds, Tamm said.
With demand from households for loans strong, the average interest rate on housing loans rose to slightly above 2.5%. The average interest rate for long-term loans taken by companies, meanwhile, reached 2.7%.
The rapid growth in the economy and in incomes saw strong growth in bank deposits. Corporate deposits decreased in June and July, but were still up 11% on year. Household deposits in July, meanwhile, were up 9% on year, indicating that they grew at about the same rate as in the first half of the year.
Editor: Aili Vahtla