Home mortgage to rise in Lithuania

Hansa-LTB, Lithuania's second-largest commercial bank, forecasts that the domestic housing loan market, which amounts to only 2.3 percent of GDP, will grow by up to 40 percent this year, while the consumer loan market is expected to soar by up to 80 percent.

Dalius Kaveckas, deputy chairman of Hansa-LTB's management board, said that government subsidies for mortgage loans contributed to the market's stellar growth of 63 percent last year, and that personal income tax privileges should give a fresh boost to the personal loan market in 2003.

Hansa-LTB, which ranks second in the personal loan market with a 29 percent share, intends to begin offering endowment mortgages, following in the footsteps of Vilniaus Bankas and Lietuvos Zemes Ukio Bankas (Lithuanian Land Bank.

Jurate Gumuliauskiene, director of the private customers' financing department at Hansa-LTB, said the bank's portfolio of private customers' loans surged by 70 percent over the first 11 months of 2002, while the respective growth rate in other local commercial banks was 60 percent.

Hansa-LTB boosted its market share by 1.6 percentage points to 29.3 percent during the 11 months.

Annual interest rates on housing loans fell by approximately 2.5 points in Lithuania over 2002.

Lithuania's ratio of housing loans to GDP is expected to rise to 2.8 percent this year, from 2.3 percent of the GDP in 2002. Kaveckas said Lithuania's housing loan market had high growth potential and should reach at least the level of the neighboring countries soon.

The ratio of housing loans to GDP is 11 percent in Estonia and 6 percent in Latvia, compared with Germany's 53 percent and Denmark's 69 percent.