In Finland, obtaining home loans is becoming more challenging as banks are increasingly scrutinizing the condition of properties rather than the borrower's financial situation.
Large real estate firms in Finland have observed a significant shift in the home loan approval process, increasingly focused on the condition of the property being purchased. According to real estate agents, including Tommi Luosmala of Tampere's Ratinan Kiinteistömaailma, banks are now examining the state of the property more closely than before, which marks a departure from the previous approach that tended to focus on the financial standing of the borrower.
This shift has particularly impacted older homes and apartments needing renovation, making it more difficult for buyers to secure financing for such properties. Agents from several major real estate agencies, such as Huoneistokeskus, Bo LKV, and Habita, have noted that banks are now thoroughly assessing the condition of properties, especially those under homeowners associations that are facing significant repairs. Mika Pärssinen, the CEO of Habita, highlights that banks are scrutinizing these types of properties much more than they did a few years ago, indicating a growing awareness of the potential financial risks associated with older or dilapidated homes.
As Finland continues to navigate its housing market challenges, the tightening loan criteria might lead to a ripple effect on housing sales, particularly in the segment of older, renovation-required properties. Prospective buyers may need to invest more in property inspections and repairs before applying for loans, further complicating the housing process and potentially slowing down market activity, especially for those with tighter budgets or low financial flexibility.
