The head of Saeima’s Budget and Finance Committee Jānis Reirs compares operations of Latvian banks in loan-related areas to a cartel.
When discussing the situation with the high payments of mortgage loan takers in Latvia, Reirs said in an interview to LTV programme Rīta panorāma that “we rescued banks in 2010 and 2019, and now we see outlines of various scenarios – if you don’t rescue again, this will happen or that”.
“We rescued them at our residents’ expense,” he added.
He continued that the “good scenario” did not come to pass and the situation did not change.
“They are like a cartel – all four say they will cease financing. All this looks like a cartel,” said Reirs, commenting that banks are unwilling to provide loans.
On Thursday, the 9th of November, the Saeima will be viewing amendments proposed by the Saeima’s Budget and Finance Committee to the Consumer Rights Protection Law in the second viewing. These amendments provide protection for mortgage loan takers.
The state could support mortgage loan takers whose payments exceed 20% of their income. However, this order will not apply to families with children, as they would be provided with support regardless of the size of their payment relative to their income, as stated in amendments proposed by the Saeima committee.
Once the Saeima approves them in the second reading, both the committee and the parliament will still have to review them in the third and final reading.
The credit institution will have to pay a fee to the mortgage taker in the amount of 30% of the interest payments calculated for the relevant quarter, but not more than two percentage points of the interest rate fixed for the period, taking into account that the reduced interest rate may not be lower than the initial rate.
It is planned that support is to be provided to those consumers for whom the last mortgage loan payment calculated during the calendar month exceeds 20% of the total disposable average monthly net income of the consumer (the borrower together with the co-borrower) over the last six months.
Also read: OPINION | Latvia needs a sort of “earthquake” – no permit, no seat in city council!
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