Citadele Bank

Demand for State-Guaranteed Mortgage Loans Might Increases

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Changes in legislation enabling to choose mortgage loans, with or without applying the home surrender principle, will make housing purchases more accessible for families with children, within the scope of the government support program, due to lower down payments.

Baiba Tētiņa, Head of Retail Lending Division at Citadele Bank, explains, "the money necessary for a down payment for standard loans and state-guaranteed loans has decreased along with changes in the legislation. Up to now, mortgage loans could be issued for up to 75 % of the market value of real estate. Now the maximum mortgage loan sum has increased to 85 %. Moreover, less participation is required from clients within the housing support program. Families with one or two children, which previously needed to come up with 10–15 % of the housing value, are the ones that benefit the most from these changes. Now we are able to lend to families, regardless of the number of children, with a down payment of 5 %."

Baiba Tētiņa concludes, "this might entail an increase in the demand for state-guaranteed mortgage loans because we see great interest and desire to buy homes during the consultation we provide".

Consulting repeatedly and assessing creditworthiness

Since mid-January, Citadele Bank has provided more than 2 000 consultations on the opportunities to receive state-guaranteed mortgage loans and easier down payment terms. Part of these consultations were repeated ones.

"Purchasing a home is a responsible decision and people most frequently sign up for consultations in order to acquaint themselves with the conditions of the program and to understand whether and what kind of housing they can afford according to their income. People turn to the bank repeatedly after making their choice on the real estate they wish to buy. This is when we sit together and look at what the terms and conditions would be for each particular family when buying their desired home," comments Baiba Tētiņa.

So far, nearly half of the families (45%) that have applied for receiving mortgage loans have one child, 42 % have two children whereas 13 % have three or more children.

Approximately 74 % the applications for state-guaranteed mortgage loans received by Citadele so far apply to homes in Riga, with 62% of applicants seeking a loan of up to EUR 40 000, and 38% of applications seeking a loan above that sum.

35% of parents who want to receive state-guaranteed mortgage loans are aged 30 or younger, 6% are above 40, while 59% are between 31 and 40.

"We thoroughly assess each family's purchase power also within the scope of the government support program in order to avoid loans turning into burdens. We witness cases where families fail to receive mortgage loans because parents have negative credit history or excessive loan obligations," says Baiba Tētiņa.

As reported previously, Citadele is currently the only bank in Latvia to offer state-guaranteed mortgage loans to families with children. In order to make home purchases more accessible, Citadele Bank engaged in the government support program for purchasing homes designed for families with children by signing an agreement with the Latvian Development Financial Institution ALTUM.

Families with children can now receive mortgage loans from Citadele with easier down payment terms and financing up to 95% of the market value of the home.

Sign up for your consultation at any Citadele Bank branch or electronically via Citadele's website, or call us at 67010873.

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