In the first nine months of 2022 there was a 10% increase for loans amounts. The average consumer loan amount reached EUR 6 500. The number of loan deals, on the other hand, remained unchanged, according to data compiled by Luminor Bank.
According to the bank, most often residents borrow money to pay for home repairs and energy efficiency of their dwellings, and to purchase a car.
The situation varied across these nine months. Residents borrowed money the least often in March, when the world was largely in a state of uncertainty after the start of the war in Ukraine. Latvian residents reduced their spending and formed more savings, the bank says. The size of consumer loans started going up in April and reached the highest point of this nine-month period in August.
Luminor private lending office manager in Baltic States Kaspars Lukačovs predicts that
due to the rapid surge of prices, the interest for loans to afford large purchases will remain high.
«Because inflation and prices of energy resources and construction materials continue going up, resulting in households having less free funds to improve their quality of life, we predict our customers’ interest for loans to afford bigger purchases will remain high,» said the expert.
According to the bank, the increase of demand for consumer loans can be explained with electricity prices. This pushes residents to consider improving the energy efficiency of their dwellings to reduce housing costs in a long-term perspective.
At the same time, with the surge of prices of construction materials there are also concerns for continued surge of prices in the future. This means residents are more keen to borrow money to perform necessary improvements to their dwelling.
Also read: Annual inflation reaches 21.8% in Latvia