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Residents are still happy to invest their savings in real estate, however, there is no desire to use the savings to cover the existing liabilities before maturity or to repay the mortgage loan.
Last year, the residents most often spent the accumulated capital on the improvement of the existing property – repair works, expansion of living space and construction of additional buildings. During the pandemic, there was also an active change of property, when the existing property was chosen to be sold in parallel, for example, from a city apartment to a larger apartment on the outskirts or a private house closer to nature. As well as the demand for the purchase of additional property grew significantly – the accumulated was invested in the purchase of a summer house or rural property, often using a loan.
“Although people have noticed new savings during a pandemic, they are not systematically diverted to repay existing loans. On the contrary, people are also willing to make new commitments to buy additional property or invest in improvements to existing housing, such as repairs or construction. The belief that “debt is not a brother” is gradually losing its force, “says Jānis Mūrnieks, Head of Private Banking at Citadele Bank.
The number of mortgage loans issued by Citadele Bank has increased by 40% this year, while the amount issued for loans for house purchase has increased by 60%. High demand has affected both real estate prices and the average loan amount. During the year, the average amount of a mortgage loan has increased from 72,000 to 80,000 euros, and Citadele has issued 60% more mortgage loans than last year. The average term of a mortgage loan has remained unchanged – 22 years.
When purchasing a home, the population has also actively used the possibilities of state support this year, and in total 40% of the mortgage loans issued by Citadele are with “Deep“warranty.
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