TALLINN — Holiday cheer cannot hide Estonia’s economic crisis as more than 500 homes have been repossessed this year due to unpaid mortgages, more than twice the amount in 2008.
Hundreds of individuals and families have been forced to move out from homes that were bought during the Baltic Tiger period after taking out their mortgages unaware that the crisis was around the corner. The banks in Estonia have repossesed and put up for auction more than 500 homes in 2009. Around 400 home loan repossession auctions have been sent to the law enforcement officers by Swedbank and more than 100 by SEB. In 2008 Swedbank only repossessed 200 homes. Meanwhile the difficulties of the unemployed is reflected in a survey conducted by Statistics Estonia where 533,000 people, 40 percent of the population, admit that it is hard to get by.
Koit Semjonov, director of Swedbank’s finance division worries that next year the number of repossessions might stay the same or even increase if the economy does not show a sign of recovery.
“We estimate the rate to stay the same or grow a little, all depends on the recovery of the economy and the jobless rate,” Semjonov told Baltic Reports.
Semjonov said that the bank is willing to help a client with payment difficulties but it all depends on the client’s will to find a solution to the problem, typically finding a new job, which given today’s situation with the job market is difficult or nigh impossible.
“The bank is interested to help the clients when they have payment difficulties but it all depends on the client’s will to find a solution to the problem, which means for example, to be an active job seeker if one has lost the job, to take part of the trainings offered to the jobless people and find other solutions to comply the financial obligations for the bank,” Semjonov said.
Triin Messimas, SEB head of private loan business development said that most of the debts are solved through cooperation between the client and the bank, and putting the property on forced sale is the last solution.
“Most of the debts will be solved in cooperation between the bank and client by applying a payment holiday, loan extension or other means,” Messimas told Baltic Reports. “The bank will avoid selling the property through forced sale until there is any chance to make the loan work.”
Semjonov asserts that one of the solution to ease the situation in job market is switching over to euro.
“Euro adoption would regain trust in Estonia and would bring new investments, which again helps to soothe the jobless rate,” told Semjonov.
However, the euro will not arrive until 2011 at the earliest, and meanwhile the growing jobless rate does not promise the change for the better anytime soon. According to Statistics Estonia the jobless rate has grown to 14.6 percent, which is the highest since the country regained it’s independence.
“Considering the prognosis of the Estonian Ministry of Finance, the number of unemployed persons to increase next year and that the jobless rate will be 13.7 percent in 2013, then it is clear that the number of people in difficulties is not going to reduce any time soon,” Andres Võrk, a Praxis Center for Policy Studies analyst told Eesti Päevaleht.
Võrk also noted that the decrease of salaries and part-time employment has reduced the income of working people. So more auctions are likely on the way.
