The rising Euribor rate and rising unemployment could mean that banks are reluctant to issue loans, but the CEO of Swedbank Estonia says that the situation is stable, writes ERR News.
Olavi Lepp, head of Swedbank’s Estonian branch, said that despite the higher Euribor rate and the resulting increase in loan fees, there are no notions that Swedbank’s customers have any difficulties making payments.
Lepp pointed out: «Things are very calm still. As long as unemployment remains in check, people will continue to perform their [financial] obligations. Therefore, I would be reluctant to talk about any kind of panic today. People haven’t even been requesting payment holidays. There is none of that today – no arrears and no applications for deferring payments.» He stated that every application goes through checking, and the bank carefully assesses the borrower’s creditworthiness.
According to Lepp, society tends to overestimate the importance of luxurious and expensive apartments in the market, and most transactions regard properties already on the secondary market.
The head of the bank mentioned that the changes in the real estate market are not as significant as previously predicted by the media, although developers who have borrowed large sums might not get the expected profit.
There has been no significant increase in unemployment in Estonia, and this has an impact on wages. Lepp pointed out that pressure will decrease when there are more free hands in the market.
Although generally optimistic, the head of the bank still indicated that there are grounds for concern in some sectors, for example, in the forestry sector. He said: «The processing industry plays a major role in our export, and we must take care of it. In terms of different parts of it, the timber industry and forestry, and how we treat one of our greatest resources. The timber sector contracted by 22 percent on the year,» and added that companies need to adapt to smaller volumes which means fewer employees.
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