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Friday 23.02.2018 | Name days: Haralds, Almants
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Swedbank: low mortgage loan interest rates will not last

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUEURIBOR and RIGIBOR interest rates that compile the variable part of loan interest rates have been at their lowest since 1999.

Both EURIBOR and RIGIBOR have been rather variable since the moment they were first introduced. This is why it remains a value that is hard to predict in household loan payments. According to the Swedbank Institute for Private Finances, the monthly payment of loans worth LVL 35 000 was equal to EUR 230 in April 2004. It increased to EUR 301 in November 2009 and reduced to EUR 198 this June.

Since the middle of 2012 EURIBOR remains low. This allows monthly payments of mortgage loans to remain at an all time low. However, latest statistical data suggests this will not last long – mortgage loan rates will rise again. “For households, the question as to when and why rates will go up is not as important as the question – am I prepared to make larger loan payments?” – Swedbank Institute for Private Finances Director Adriana Kaulina says.

If the rates go up, so will the monthly payments.

Households that have been making mortgage payments for several years have already experienced increased monthly payments. They are likely to find a way to adapt their budgets. Households can use the current period of low interest rates to their advantage. They can make savings from the money they save on mortgage payments or divert them as additional payments to help pay the loan sooner, experts say.

“Households that take on long-term obligations need to understand the future perspective”, Kaulina said. “In order to be able to cover the possible increase of interest rates in the future, it is imperative that households do not overburden their families’ budgets. They should have a safety net (additional savings)”.

Even though nine out of ten mortgage loans are usually issued in euro, the popularity of taking mortgage loans in lats was rather high last year. Those who take loans in lats are more interested about the situation with euro adoption.

Loans taken in lats will be automatically converted into euro on January 1, 2014. This will be done with no additional expenses and will be linked as soon as possible to the EURIBOR rate.

Ref: 102.109.109.7850


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