FI Analys No 34: Temporary amortisation exemption led to new mortgagors borrowing

The temporary amortisation exemption resulted in new mortgagors borrowing almost 4 per cent more and buying homes that were approximately 1 per cent more expensive, concludes a new FI Analysis.

The observation that loans increased more than prices indicates that new mortgagors used the exemption for something other than buying more expensive homes, such as larger mortgage share on their home, savings, consumption, or renovations.

In April 2020, FI gave the banks the option of offering all mortgagors temporary exemption from the amortisation requirements. The exemption has allowed mortgagors to pause their amortisation payments until 31 August 2021. The aim was to give them greater financial manoeuvrability during the crisis. It is primarily new mortgagors who are borrowing a lot, and therefore amortising a lot, who have chosen to use the exemption.