Funding

The Housing Fund of Finland has four sources of funding. These are all through income from outstanding ARAVA housing loans, securitisation and external borrowing, charges from State guarantees and appropriations from the State budget, though the last appropriations were received in 1993 because of limitations within the State budget.

Since 1995, securitisation has been an important source of funding for the Housing Fund of Finland and an alternative to direct borrowing on the capital market. To date, the Housing Fund of Finland has raised a sum equivalent to € 2.7 billion via six Fennica transactions through the Fennica Programme. Funding through securitisation is not counted as being part of the government debt.

The Housing Fund of Finland diversified its funding sources in 2001 by negotiating and signing two loan agreements with two multilateral banks, the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB). Through these two loan agreements, equivalent to € 500 million in total, ARA utilised its well-known position on the European capital market and the good reputation of Finnish social housing. For example, key issues which were important when reaching a positive settlement in the negotiations with the EIB were innovative projects - such as the Viikki area in Helsinki -and the progress of energy programmes and energy research in Finland, in addition to ARA´s quality and cost control.

In addition, the State and ARA have acquired funds directly from the capital market, with the interest rate clearly below the Euribor rate.