New business loans down by almost a third

In August, Finnish companies took out loans worth just one billion euros. Bank of Finland statistics show that the level of new loans fell by almost a third from July.

The level of new business loans was around €100mn lower than in August last year.

“Companies’ reduced demand for finance is not a good sign,” says Petri Malinen, an economist at Suomen Yrittäjät, the Finnish SME association, says.

He considers business growth stimuli essential for the entire national economy.

“The Finnish economy has to grow. This requires Finnish companies to dare to invest and create jobs, which would increase consumers’ spending confidence and reinforce the virtuous circle by boosting economic activity. It’s essential for companies to get more growth stimuli to get them investing and growing,” Malinen says.

The average interest rate on new business loans rose slightly from July to 5.36% in August.

“Amid conflicting economic outlooks, companies are not going to invest at these interest rates,” Malinen says.

Interest in new homes not seen in banks

In August 2024, consumers took out €1.1bn worth of new mortgages, €40mn less than August last year. The continued low confidence of consumers continues to be seen in borrowing.

“For as long as the economy is stalling and the uncertainty on the jobs market continues, a large number of Finns won’t dare to buy housing, even if interest rates have come down a lot,” Malinen says.

The interest rates on new mortgages have decreased significantly since the start of 2024. In August, new mortgages had an average interest rate of 3.93%, well below the level at the beginning of the year. Market rates continue to strongly suggest a further rate cut by the ECB in the final months of the year.

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