2011-04-11
The findings of the survey commissioned by the Bank of Lithuania shows 11.3% of Lithuania’s households are repaying housing loans. The need to buy their own home as the top reason for borrowing was reported by the majority of respondents. Bank credit standards, income growth prospects were less significant to the borrowing. However, acceptable bank credit standards and optimistic outlook regarding the growth of income in future were reported as being more significant reasons to borrow among those who obtained housing loans between 2010 and 2011.
“Such priorities regarding the reasons for borrowing show that in the context of economic recovery there is an improvement in households’ perception related to future income and bank credit standards. This is expected to encourage households borrowing and ease debt burden for households,” Kristina Grigaite, an economist from the Financial Stability division under the Economics Department of the Bank of Lithuania, said.
In 2010, an average loan term was 23 years and an average housing loan amount made up around 154,000 litas. More households preferred loans in euros with a short interest rate fixation period (up to 1 year), and annuity method for calculating their periodical instalments.
The average share of a household’s income, allocated for the repayment of its housing loan made up 26% of the household’s disposable income, a slight decrease compared with the data for 2009. The number of households that reported the housing loan being a very heavy burden for them went down by 3 percentage points compared with the previous year.
Almost 33% of respondents pointed out that they were at least once late in paying housing loan instalments within the last 12 months. Most often households were late to pay for utilities and other services. Meanwhile, housing loan instalments or payments for additional financial liabilities were considered by households significant, and households did their best to pay them on time. A number of households that delayed paying loan instalments or other payments went down compared with the findings of the last year survey.
In 2010, housing loan repayment terms and conditions were changed for 22% of households (about the same, as last year) that participated in the survey. The number of respondents for whom the loan repayment terms have been changed grew by 9 percentage points compared to the number of respondents who intended to do it during the previous year survey. Most often households had their principal repayment postponed or loan repayment term, the loan interest fixation period, and the bank margin changed. In 2011, around 17% of households report they intend to apply to banks asking to change their housing loan payment terms and conditions, a 4 percentage point decrease compared to 2010.
The Bank of Lithuania periodically conducts a survey of households with housing loans once a year since 2007. The present survey was conducted by Spinter Tyrimai, a market and public research company, between February and March 2011. The number of Lithuanian households with a housing loan from a bank, which were interviewed during the survey, was 995. A detailed report can be found on the Bank of Lithuania website (172.1 KB download icon).