Financial Services, Latvia, Legislation, Loan, Real Estate

The government originally approved amendments to the Insolvency Law on September 25, according to which bank mortgages issued to borrowers who buy a home/apartment, and have no other domicile, will be considered non-recourse loans.

Commercial banks were very critical of these amendments, saying that they will cause credits to become more expensive due to which commercial banks will no longer interested in the state housing support program for families with children. The president Andris Berzins promulgated the law, yet criticized the risks that these amendments could pose to Latvia's national economy.

Coalition members indicated that it would be necessary to work on these amendments in order to make the said principle an optional choice, instead of a mandatory procedure. However, the coalition is planning to review this matter only in January.

Some banks have already revised its mortgage policy in December 2014, immediately after the entry into force of amendments. In particular, Swedbank increased the amount of the down payment when buying mortgage apartments from 15-10% to 30%.