Repaying mortgage loan is harder for Latvian residents than for residents of Estonia and Lithuania - RIA.com Marketplaces

RIGA - Latvian residents find it harder to repay a mortgage than residents of Estonia and Lithuania do, representatives of RIA.com Marketplaces told LETA, referring to data compiled by the company.

According to the company, average wages in Latvia are well below those in Estonia and similar to those in Lithuania, while average mortgage rates in Latvia are the highest in the Baltic countries. Therefore it is more difficult for Latvian residents to repay their mortgage loans than for Lithuanian and Estonian residents.

Based on RIA.com Marketplaces data, the average monthly wage in Latvia in the second quarter of 2019 was EUR 806 after tax, in Lithuania - EUR 818, and in Estonia - EUR 1,187. In the meantime, the average mortgage rate in Latvia was around 2.9 percent, 2.5 percent to 2.7 percent in Estonia, and 2.3 percent in Lithuania.

The company also points out that interest rates on loans in the Baltic countries are similar to those in Germany, Denmark, Sweden and Finland, but salaries in the Baltics are far smaller.

At the same time, the Baltic countries are well ahead of Belarus, Russia and Ukraine, for example, mortgage rates in Belarus are around 13 percent, while the average salary - EUR 403, and mortgage rates in Ukraine stand at 21 percent on the average, while the average salary is EUR 322.

With the average salary in Latvia at the moment, minus all other monthly payments and taxes, it would take 62 months for a resident of Latvia to save up for a EUR 50,000 apartment. A resident of Lithuania would have to save money for 62 months, and a resident of Estonia 42 months.

A resident of Finland and Sweden would have to save money for approximately 1.5 years to buy a EUR 50,000 apartment, and a resident of Denmark - fifteen months. In the meantime, people in Ukraine would have to save money for 155 months or thirteen years to buy a EUR 50,000 apartment, and people in Belarus - 125 months or ten years.

At the same time, the company notes that the average mortgage rate is not the only factor that matters when buying a home - borrowers also have to take into account insurance, taxes, and other costs.