Review of Changes in Mortgage Lending in Estonia in 2024: Expert Opinion

In 2024, mortgage lending in Estonia underwent some significant changes that affected legislation, current interest rates, and the role of banks in the process.

Firstly, it is worth noting the changes in legislation. Amendments were made to the credit legislation in Estonia, leading to stricter regulation of the terms for granting mortgage loans. This step was taken in response to the increase in loan defaults in previous years. The new legislation now requires banks to conduct more thorough assessments of borrowers' creditworthiness, which in turn can reduce risks for banks and financial institutions.

The second important aspect is the current mortgage interest rates. In 2024, we see a slight decrease in mortgage rates. This is largely due to the policy of the European Central Bank, which continues to maintain low interest rates to stimulate the economy. However, despite this, mortgage rates in Estonia remain relatively high compared to some other EU countries.

Thirdly, the role of banks and financial institutions in mortgage lending continues to strengthen. Banks have become more active in providing mortgage loans, while regulators continue to tighten control over their activities. This has led to increased competition among banks, which in turn leads to improved conditions for borrowers.

Overall, the changes in mortgage lending in Estonia in 2024 reflect general trends that we see in the EU, but also specific features of the Estonian market. This reminds us of the importance of considering both macroeconomic factors and the individual characteristics of each market when making lending decisions.