Mortgages are taken less, amounts are growing
Numerically, the amount of mortgage loans decreased by 7% in 2022, while the average loan amount increased by less than 6%, according to the data collected by AS Kredītinformations birojs (KIB). 67% increase in seven years2021. In 2018, the number of home loans issued returned to the pre-pandemic level, but last year it decreased slightly again. “Rapidly rising inflation and rising house prices have had an impact on the lending market, and data shows that the number of mortgage loans issued in 2022 is lower than a year ago. However, a constant increase in the average amount issued over at least the last 7 years shows that housing prices continue to rise and are gradually approaching the EU average level. If in 2016 the average amount issued was approximately 48 thousand euros, in 2021 – 76 thousand euros, then last year it was already 80 thousand euros. This is an increase of approximately 67% in seven years,” concludes Intars Miķelsons, a member of the board of AS Kredītinformations birojs. The most active borrowers are in the age group from 31 to 40 years old, with whom 45% of mortgage loan contracts are concluded, as well as from 26 to 30 years old, to whom every fourth home loan is issued.
Repayment terms are increasing
As the average amount of issued loans increases, the repayment terms of the contracts also increase. Loans up to 10 years are becoming increasingly unpopular, but contracts with a term of 25 years have already reached almost half of all transactions. If in 2016 a quarter of loans with a term of more than 25 years were issued, then in 2022 they reached about 48%. “Since more and more new projects are appearing on the market, which are currently in great demand in the market due to their energy efficiency, but also relatively expensive, more and more borrowers choose to take a loan for the maximum term for the purchase of such properties. Likewise, the increase in housing prices far exceeds the increase in wages, so borrowers are forced to choose longer repayment terms,” says I. Miķelsons.
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