Notification by the Finnish Financial Supervisory Authority (FIN-FSA) on the loan-to-value (LTV) ratio limit

Template for notifying national macroprudential measures not covered by CRR/CRD

Please send this template to

• [e-mail] notifying the ESRB;
• [e-mail] notifying the ECB.

Emailing this template to the above-mentioned addresses constitutes an official notification, no further official letter is required. In order to facilitate the work of the notified authorities, please send the notification template in a format that allows electronically copying the information.

1. Notifying national authority and scope of the notification

1.1 Name of the notifying authority.

FIN-FSA

1.2 Name of the macroprudential measure	Loan-to-collateral, LTC
	that is notified.
2. Description of the measure
2.1	Description of the measure.	Maximum loan-to-collateral (LTC) ratio, as referred to in
		chapter 15, section 11 of the Credit Institutions Act. The
		statutory standard level of the LTC ratio is 90% for
		residential mortgage loans other than first-home loans.
		The level may be lowered by 10 % based on a decision
		by the FIN-FSA Board. With the decision of 19 March
		2018, the Board lowered the maximum LTC ratio for
		residential mortgage loans other than first-home loans by
		5 percentage points. On 29 June 2020, The FIN-FSA
		Board decided that the LTC ratio will be adjusted and
		brought back to the statutory standard level of 90%.
2.2	Legal basis and process of	Chapter 15, section 11 of the Credit Institutions Act.
	implementation of the measure.

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Date of template version: 2016-03-01

2.3		Coverage	Mortgages to households provided by credit institutions
2.4		Any other relevant information.	The aim of the FIN-FSA Board decision was to promote
			the functioning of the housing and mortgage market
			during the stressed situation due to the pandemic.
3.	Timing
3.1		Timing of the decision	29 June 2020
3.2		Timing of the publication	29 June 2020
3.3		Disclosure	Press release:
			https://www.finanssivalvonta.fi/en/publications-and-press-
			releases/Press-release/2020/macroprudential-decision-
			residential-mortgage-loan-cap-to-be-relaxed-
			countercyclical-capital-buffer-rate-remains-unchanged-at-
			0.0-percent/
3.4		Timing of the application	The decision entered into force on 29 June 2020
3.5		End date (if applicable)	n.a.

4. Reason for the activation of the measure

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4.1	Description of the macroprudential risk to	Bringing the maximum LTC ratio for residential mortgage
	be addressed.	loans other than first-home loans back to the base level
		was done in order to support the housing market and the
		real economy in the current exceptional circumstances.
		Over the past year, about three quarters of the euro
		volume of new residential mortgage loans have been
		housing loans other than first-home loans. Relaxing the
		LTC ratio for these loans could increase housing demand
		and total demand compared with a situation where the
		tighter LTC ratio would continue to apply. Supporting
		demand can contribute to offsetting the contraction in
		house sales and the economy and thus alleviate the
		threat of an exceptional build-up of risks to financial
		stability. As a whole, however, the impact of the measure
		will be fairly limited in the current situation.
4.2	Description of the indicators on the basis	Estimated development of mortgage demand
	of which the measure is activated.
4.3	Effects of the measure.	See 4.1.
5. Cross-border and cross-sector impact of the measure
5.1	Assessment of cross-border effects and	The measure applies to all domestic and foreign
	the likely impact on the internal market	mortgage providing credit institutions in Finland. The
	(Article 133(11)(d) of the CRD IV and	market share of mortgage providers other than banks is
	Recommendation ESRB/2015/2)	insignificant taking into account the objective of the
		measure.

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5.2		Assessment of leakages and regulatory	n.a.
		arbitrage within the notifying Member
		State
5.3		Request for reciprocation	n.a.
6.	Miscellaneous
6.1		Contact person(s) at notifying authority.	Peik Granlund, [e-mail], tel.+358-9-
			1835236
6.2		Any other relevant information.

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