SEB Bank provided residents with more than 1,200 mortgage loans worth nearly EUR 51 million in the first half-year of 2016. This is three times more in comparison with the same period of 2015. Considering the record-low interest rates, the average monthly payment for mortgage loans currently does not exceed EUR 236.
«The greatest degree of interest for mortgage loans is noticed in Riga and out outskirts – approximately 80% of transactions are concentrated in this region. Other major cities include Valmiera, Liapaja, Ogre and Jelgava. Most often people buy apartments in standard project buildings. Approximately 10-15% of deals concern apartments in new project buildings, and another 10 – private homes. We have noticed that demand for private houses has begun to grow lately – clients either choose from existing offers or build their own home from the ground up. We have also noticed that many residents improve their housing by making repairs or by expanding their living area,» – says SEB Bank board member Arnis Skapars.
Compared with the first six months of 2015, demand for mortgage loans has increased this year – the volume of offered funding is three times larger. The growing demand is explained with both the growing purchasing power of the population and the accessibility of mortgage loans. Factors that delay the industry’s growth include insufficient supply of medium-class housing and the necessity for clients to provide the first instalment.
«The problem of gathering money to afford the first instalment is especially topical for young families in which parents are employed and have a good income but require a lot of time to save up enough money. In addition, a significant portion of their money is also used to pay rent. According to SEB Bank’s data, the size of an average monthly mortgage payment does not exceed EUR 236 this year. In half of all cases, payment size does not exceed EUR 200 per month. According to several reviews of the country’s real estate market, the fee for rent of an average-size apartment can be EUR 250 or more. This is why we are very happy that Altum programme is active in Latvia,» – Skapars continues.
Approximately 40% of mortgage loans allocated this year were provided as part of Altum. Since the beginning of our participation in the programme, SEB Bank has provided more than 850 loans with guarantees from the state.
«We believe the responsibility of banks before society lies in efforts aimed at making sure monthly mortgage payments do not become too big for residents. This is why we carefully view current and future purchasing power of residents and offer options to help protect them from possible risks. For example, every second loan taker (54%) has insurance of loan payments. This service is becoming more and more popular every year. Furthermore, it is important to explain to residents the importance of making savings. According to results of SEB Banks Baltic Household Outlook, a significant part of the population do not feel financially secure – approximately 60% of respondents, according to the outlook, are not prepared to deal with unexpected expenses. We are happy that the number of financially unprepared residents continues to decline,» – Skapars concluded.