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SEB predicts rate hikes for Estonia

  • 2006-11-29
  • From wire reports
TALLINN - Bank loans will become more expensive in 2007 due to the continual rise of inter-bank interest rates, the SEB Group has forecast.

According to Swedish bank SEB group's economic overview of the Nordic countries, the European central bank will raise its base interest rate later this year, and in 2007 the base interest rate will increase to 4.0 percent. For Estonian consumers, this means that interest on real estate loans will increase by about five percent.

"There's no sense in sowing panic, but the warning tones are there," Hardo Pajula, chief economist with SEB Eesti Uhispank told the Baltic News Service commenting that, "Loan interests could rise considerably during 2007."
The Bank of Estonia reported on Nov. 24 that the average interest on euro loans rose by 1.48 percentage points to 4.91 percent in October when compared with the same month last year, the interest on kroon loans climbed by 1.05 percentage points to 6.73 percent.