Financial Services, Latvia, Legislation, Loan, Real Estate, Society

"This is a fine example of what the state and politicians should not do. They should think of ways to create an environment in the country that would enable people to earn more, make them realize they need to save, and make it possible for them to take mortgages to buy a home," stressed Smits.

The state should take care to enable as many people as possible to earn more so they can afford an apartment, not seek artificial solutions to enable some 200 families to take out a loan from a bank and buy a home.

This is proven by how little the program has achieved so far. After the program was announced, public interest was enormous, over 800 families arranged meetings with consultants – but only one loan has been issued under the program as of now.

"Public interest is enormous, because even the name of the program – state support program – is improper. People come for consultation and only then do they realize that no one will give them anything, that the state can only underwrite part of the down payment. Young families' limited solvency bars them from applying for these mortgages," explained Smits.

Arco Real Estate board member Maris Laukalejs agreed that young families could at best afford apartments in Soviet-era apartment buildings or in the regions, where prices are lower.

Citadele is currently the only bank participating in the state support program. The state originally allotted EUR 332,678 for the program, and later an additional EUR 635,295.