Analytics, Baltic, Financial Services, Loan, Real Estate

Housing loan market has been growing in Estonia and Lithuania since 2013 while it is still shrinking in Latvia, according to the latest SEB Baltic Household Outlook.

The amount of new housing loans issued in Lithuania in 2015 rose by 21% compared to 2014, in Estonia the growth was 15% but in Latvia only 9%.

Despite the increasing volumes of new loans in Latvia the total loan portfolio is declining as the amortization of housing loans is higher than the volumes of new loans issued, the bank said.

”When taking into account changes in disposable income, households in Latvia and Lithuania were better off in 2015 than they were in 2010 with respect to house prices. OECD is calculating the ratio of house prices to disposable income and the estimated ratio is 6% lower in Lithuania and 7% lower in Latvia in 2015 Q2 (the latest data available) compared to 2010. But in Estonia the ratio has increased within five years by 17%. Hence, the growth of house prices in 2010-2015 has been beyond the disposable income of households in Estonia,” SEB Banka said in the report.

The majority of mortgages, which are mainly taken for house purchases, is kept by households where the main borrower is 25-44 years old, and the age group of 25-34 years is the most active in new mortgage borrowing. The share of age group 25-34 years in new mortgages increased by 3 percentage points in 2015 in all Baltic countries.