On Thursday, the 30th of January, the Bank of Latvia will report on mortgage re-crediting options available for Latvian residents, as confirmed by representatives of the central bank.
Last year, amendments to a number of regulations came into force to simplify mortgage re-crediting between lenders. However, so far, residents have made very little use of this opportunity, because in December 2023, amendments were adopted to the Consumer Rights Protection Law, providing for compensation of 30% of the total interest payments on the loan.
In order not to lose this compensation, it was not profitable for most borrowers to re-credit the mortgage loans received by the 31st of October, 2023. The last compensation was paid in January 2025.
The Bank of Latvia points out that thus, mortgage borrowers may consider improving credit conditions by evaluating the conditions at their own and competing banks or other financial institutions that issue mortgage loans.
The assessment of the economists of the Bank of Latvia shows that almost half of the borrowers could have a financial motivation to re-credit the mortgage loan under the new conditions. Assuming that the credits would be re-credited only by those who would save at least EUR 1 000, the total savings would be almost EUR 90 million.
The Bank of Latvia has developed a number of tools that will make it easier for people to use re-crediting. Information about these tools will be provided at a press briefing at 11:00 a.m. on the 30th of January in the Bank of Latvia building in Riga, K. Valdemara Street 1B.
It has already been reported that on the 15th of February, 2024, the Saeima adopted in its final reading the amendments to the Law on Consumer Rights Protection, the Law on Insurance Contract, the Law on Credit Institutions and the Notarial Law prepared by the Ministry of Economics, the aim of which is to simplify mortgage re-crediting between banks.
It was estimated by the ministry that after the adoption of the changes, the re-crediting process will take no more than two months, and it will become easier for the consumer – it will be necessary to turn to the potential lender, evaluate his offer, conclude a new mortgage agreement and remotely certify the signature of the request for corroboration of the pledge rights in favour of the new lender to a sworn notary. The whole process will be done remotely.
Amendments to the Consumer Protection Law stipulate that the consumer may not be charged a re-crediting fee or compensation. The fee for drawing up a new credit agreement or issuing a credit may not be higher than 1% of the amount of the new mortgage loan. The consumer has the right to divide this compensation into three payments. The amount of such compensation may not be higher than the fee applied by the acquiring credit provider for the issuance of new mortgage loans at that time.