EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 4 March  2022  
on macroprudential measures  
(CON/20 22/8) 
 
Introduction and legal basis  
On 31 January 2022 the European Central Bank (ECB) received a request from the Finnish Ministry of 
Finance  for an opinion on a draft Law on c ertain macroprudential measures  (hereinafter the ‘draft law’) . 
The ECB’s competence to deliver an opinion is based on Articles 127(4)  and 282(5) of the Treaty on the 
Functioning of the European Union and the six th indent of Article 2(1) of Council Decision 98/415/EC1, as 
the draft law relates to rules applicable to financial institutions insofar as they materially influence the 
stabili ty of financial institutions and markets.  In accordance with the first sentence of Article 17.5 of the 
Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.  
 
1. Purpose of the draft law  
1.1 The purpose of the draft law is to curb the growth of the direct and indirect indebtedness of private 
individuals and households and to safeguard financial stability  in Finland . The draft law intends  to 
prevent the extension of the repayment times of household mortgage loans, limit excessive lending 
in particular to housing companies, promote customer protection and improve credit granting 
processes related to other consumer lending.   
1.2 In particular, the draft law proposes that the current provisions on the loan- to-value (LTV ) ratio 
regarding mortgage loans applicable to credit institutions are extended to apply to lenders who fall 
within the scope of the Law on the registration of certain lenders and credit intermediaries2. As with 
the current LTV ratio limit  appli cable  to credit institutions, the size of the mortgage loan would be 
limited to 90 %  of the available collateral (or , in the case of first -time buyers , 95 %). According to the 
draft law , the Board of the Finnish Financial Supervisory Authority (F IN-FSA) would be given the 
power to decrease the maximum LTV ratio amount by a maximum of 10 percentage points . The 
provision would apply  where the risks to financial stability are growing exceptionally. According to 
the explanatory memorandum accompanying the draft law, the limit of the maximum amount of the 
reduction of the LTV ratio restricts  the discretion of F IN-FSA in line with applicable constitutional 
requirements. F IN-FSA would also have power to decide on restrictions on the use of certain forms 
of credit protection (e.g. guarantees and credit insurance) i n the calculation of the LTV ratio under 
the Law on the registration of certain lenders and credi t intermediaries . FIN-FSA would have the 
 
1  Council Decision 98/415/EC of 29  June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions ( OJ L 189, 3.7.1998, p.  42). 
2  Laki eräiden luotonantajien ja luotonvälittäjien rekisteröinnistä 14.10.2016/853.  
ECB -PUBLIC  
2 power to regulate specific situations where the LTV ratio can be derogated from  as well . The new 
powers would correspond to the powers the Board of F IN-FSA already exercises  regarding the LTV 
ratio applicable to credit institutions.  
1.3 The draft law proposes that a maximum loan period of 30 years be applied to residential mortgages. 
However, in each calendar quarter 10 %  of the total amount of a lender’s loans would be allowed t o 
exceed the 30- year limit.  
1.4 According to the draft law loans granted to housing companies , in the event  of the construction of 
new residential properties , would be limited to 60 % of the value of the debt -free sales price of the 
shares of the housing company.  Such loans would also be subject to the 30- year limit on the loan 
period,  and it would be prohibited to allow amortisation- free years of the housing company ’s loan 
during the first five years after the building has been put into use.  
1.5 Accor ding to the explanatory memorandum accompanying the draft law, alternative or 
complementary measures to limit the indebtedness of households that  were assessed, but ultimately  
not included in the draft law, include the possibility for an upper limit on the ratio of overall 
indebtedness to the borrower’s income.  
1.6 The draft law also proposes to introduce provisions concerning the management of  insolvency risks 
when  granting consumer credit aimed at clarifying the principles and procedures related to granting 
loans and the protection of customers.  
1.7 Finally, a ccording to the draft law , FIN-FSA would be given supervisory responsibility over  the entities 
that must  be registered under the current Law on the registration of certain lenders and credit 
intermediaries . This would include supervising compliance with registration requirements, consumer 
protection provisions and anti -money laundering provisions. The supervisory powers and supervisory 
fees of F IN-FSA would be expanded accordingly.  
 
2. General observations   
2.1 The ECB recalls that in its previous opinion on macroprudential oversight  in Finland3 it expressed its 
support for the design of effective macroprudential policy frameworks within Member States, in line 
with the guiding principles set out in  Recommendation ESRB/2011/3 of the European Systemic Risk 
Board4.  
2.2 The ECB notes that the objectives of the draft law are in line with the principles set out in the 
European Systemic Risk Board’s Recommendation on intermediate objectives and instruments of 
macroprudential policy, in particular with regard to the objective to mitigate and prevent excessive 
credit growth and leverage5. 
 
 
3  See Opinion CON/2013/82. All ECB opinions are available on EUR -Lex. 
4   Recommendation ESRB/2011/3 of the European Systemic Risk Board of 22 December 2011 on the macro- prudential  
mandate of national authorities (OJ C 41, 14.2.2012, p.  1). 
5  See paragraph 2.2 of Opinion CON/2017/11 and Recommendation ESRB/2013/1 of the European Systemic Risk 
Board of 4 April  2013 on intermediate objectives and instruments of macro -prudential policy (OJ C 170, 15.6.2013,  
p. 1). 
ECB -PUBLIC  
3 3. Specific observations  
3.1 As emphasised in previous opinions6, and in the Governing Council statement on Macroprudential 
Policies ,7 from a financial stability perspective, the ECB supports  the implementation of a legislative 
framework for borrower -based measures in all euro area member countries . Against this background , 
the ECB welcomes the draft law’s proposed extension of the provisions on the LTV  ratio,  that are 
currently appl icable  to credit institutions , to non-credit institution lenders8. 
3.2 The ECB also takes note of the definition that is used for the LTV ratio in Finland. More specifically, 
differing from what is prescribed in Recommendation ESRB/2019/8 of the European Systemic Risk 
Board9, the LTV ratio is defined in a manner that allows assets other than real estate assets to be 
considered as collateral.   
3.3 Regarding FIN-FSA’s power to reduce the maximum amount of the LTV ratio by a maximum of 
10 percentage points , in general, the ECB stresses that the relevant authorities should have the 
capacity  to act in a flexible and proportionate way when setting and calibrating macroprudential 
measures . This will enable them  to effectively and efficiently  address potential risks to financial 
stability10, while acting within the preestablished legal framework. The ECB understands that the limit 
on the maximum amount of the reduction of the LTV ratio is intended to restrict  the discretion of F IN-
FSA in view of applicable constitutional requirements.  Available information on borrower -based 
measures adopted by other Member States11 suggests that the lower limits o f the foreseen LTV ratio 
under the draft law are close to the ratios that are applied in most of th ose Member States. In that 
context, a reduction of the current lower limit of the LTV ratio, to the extent possible within the national 
constitutional framework, would ensure effective policy action, taking into account changing macro-
financial conditions. Such a reduct ion of the lower limit would also allow for the potential application 
of stricter limits, for instance for buy -to-let purposes, for non- first-time buyers, as well as under stress 
scenarios. Finally, the ECB suggests a regular review of the limit to allow F IN-FSA to take into 
account policy experience and the implications of changes in macroeconomic and macro- financial 
conditions12.  
3.4 The ECB again recalls  its support for the implementation of a legislative framework for borrower -
based measures in all euro area member countries13, which are known to be effective in addressing 
risks. The availability of a comprehensive set of borrower -based measures, including income- based 
 
6  See paragraph 2.3 of Opinion C ON/2017/11 , paragraph 2.4 of Opinion CON/2017/21 , paragraph 3.2 of Opinion  
CON/2018/9,  paragraph 2.1 of Opinion CON/2019/34 and paragraph 2.3 of Opinion CON/2020/1.  
7  See Real estate risks section of the Governing Council statement on Macroprudential Policies, available on the ECB 
website at www.ecb.europa.eu.   
8  Lenders falling within the scope of the Law on the registration of certain lenders and credit intermediaries (including 
entities, which grant consumer loans and loans to housi ng associations).   
9 Recommendation ESRB/2019/8 of the European Systemic Risk Board of 27 June 2019 on medium -term vulnerabilities 
in the residential real estate sector in Finland (OJ C 366, 30.10.2019, p.29).  
10  See paragraph 2.3 of Opinion CON/2017/11  and paragraph 3.1 of Opinion CON/2019/34.  
11   Due to the lack of harmonisation of borrower -based measures and the related statistical data, there is limited  
information available to compare these measures across Member States. See Overview of n ational  measures of 
macroprudential interest, ESRB, available on the ESRB website at www.esrb.europa.eu . 
12  See paragraph 2.3 of Opinion CON/2017/11,  paragraph 2.4 of Opinion CON/2017/21 , paragraph 2 of Opinion 
CON/2016/8,  paragraph 3.1 of Opinion CON/2019/34 and paragraph 2.3 of Opinion CON/2020/1.  
13  See Real estate risks section of the Governing Council statement on Macroprudential Policies, available on the ECB 
website at www.ecb.europa.eu.    
ECB -PUBLIC  
4 measures, would enable F IN-FSA to respond in a flexible and proportionate way to potential risks to 
financial stability14. The inclusion of such measures into the Finnish legislative framework would be 
also in line with the actions prescribed in the aforementioned country -specific Recommendation 
ESRB/2019/8 of the European Systemic Risk Board.  
 
This opinion will b e published o n EUR -Lex.  
 
 
Done at Frankfurt am Main, 4 March 2022.  
 
[signed]  
 
The President of the ECB  
Christine  LAGARDE  
 
14   See paragraph 2.3 of Opinion CON/2017/11 and paragraph 2.4 of Opinion CON/2020/1.