Covered Bond Framework Q1 2021

Nordic housing markets heating up House prices 225 |Index, 2007=100 Housing market 3m moving average 200 175 150 125 100 Sweden Finland Households' credit growth 225 15.0 % y/y 12.5 200 10.0 175 7.5 Norway 150 5.0 125 2.5 100 0.0 15.0 Households' credit growth % y/y 12.5 Sweden Norway Denmark Finland 10.0 7.5 5.0 2.5 0.0 Denmark 75 -2.5 -2.5 75 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: Nordea Markets and Macrobond Source: Macrobond and Nordea Comments Contrary to expectations, house prices have increased to record-high levels in all the Nordic countries during the crisis. This is not least due to the unprecedented expansionary fiscal and monetary policy in support of households and businesses The crisis has had a limited effect on those groups in the labour market which are more active in the housing market, while demand has surged due to preferences shifting towards larger homes and single-family homes. At the same time, people's mobility has been severely restricted, causing a sharp decline in the number of homes on the market, which in turn has contributed to driving prices higher House prices are expected to continue to rise in all four countries this year and next year. However, interest rates are not likely to go lower, and at some point, the expansionary fiscal policies will come to an end. Moreover, as mobility levels increase, housing supply will increase again. Against this backdrop, the pace of price growth will slow. If the housing market remains in good shape, the economy will as well, so the benign trend in house prices is helping all the Nordic countries to get through the crisis 20 Source: Nordea Markets and Macrobond Nordea

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