In the first half of this year, Luminor issued housing loans in Latvia, Lithuania and Estonia in the amount of 438.2 million euros, which is one and a half times more than a year earlier – in the first half of 2020, when 171.7 million euros were issued to households in the Baltics.
In the first six months of this year, the amount of housing loans issued to Luminor customers in Latvia has increased almost three times compared to the corresponding period last year – if in the first half of 2020 they were 37.3 million euros, then this year already 102.6 million euros. In the second quarter, Luminor customers in Latvia borrowed 10% more for housing than in the first three months of this year.
“During the first wave of the pandemic last spring, we observed caution regarding real estate transactions in all Baltic countries. In turn, the market became more active already in June last year, and already in the autumn the volume of mortgage lending reached a record high level. According to our data, this year mortgage loan records in Latvia and Estonia were registered in March, but in Lithuania – in May. The average amount borrowed by Luminor customers for the purchase of a home is 100 thousand euros, including the first installment, ” informs Kaspars Lukačovs, Luminor’s head of housing lending in the Baltics.
Clients are actively interested in financing various properties and this year Luminor has provided consultations on housing loans to more than 35 thousand residents of the Baltic States. The greatest interest is in the purchase of apartments in new projects, followed by standard-type apartments. Most often, customers want to buy a two-room or three-room apartment in Riga with an area of 50 to 65 square meters.
The pandemic and work from home have also stimulated interest in real estate in the regions, so many are considering buying a summer house or country house outside the capital.
“We have taken these trends into account and become more flexible in lending to properties in the regions. We also issue a lot of loans for the implementation of ideas – for home repairs, purchase of rural property or summer houses, secured by property already owned by the client, which gives residents more opportunities to choose non-standard real estate. For example, it can buy an older summer house that would not have enough liquidity to get a home loan, ”says K. Lukačovs.
Despite the rapid growth of loans, Luminor customers have generally deposited significantly more than they have borrowed, which in turn has contributed to lower rates on new business. According to Luminor’s estimates, average interest rates on mortgage loans issued in Latvia over the past year have decreased by more than 12%. At the end of June this year, Luminor banka’s total loan portfolio in the Baltics was EUR 9.641 billion, while its deposit portfolio was EUR 10.632 billion.
“It is important to note that we initially expected the negative impact of the pandemic restrictions on customers’ ability to meet their current obligations and willingness to borrow. However, this turned out to be misleading, as most existing and new customers not only make monthly loan payments on schedule, but also pay their obligations ahead of schedule. We pay special attention to the clients’ ability to repay their obligations even before the financing is granted – in the first half of the year, the share of non-performing loans in our total loan portfolio was only 2.6%, which is the lowest figure in the bank’s history, ”emphasizes K. Lukačovs.
Luminor
–
