2012-04-19
Survey: the number of households with overdue loans and those considering loans as a heavy burden declined
The number of households whose loan payments are overdue declined by one-tenth, whereas the number of those considering housing loans as a heavy burden went down by one-fifth. It was shown by the survey of households with housing loans ordered by the Bank of Lithuania.
According to the survey data, around 30 per cent of domestic households were late in making loan payments at least once in the last twelve months, last year they comprised 33 per cent. Compared to the previous year, a decrease of 7 percentage points (from 42% to 35%) was recorded in the number of households which reported that the housing loan was a very heavy burden for them.
“This shows that the financial burden of households becomes easier”, stated Ms. Kristina Grigaitė, Senior Economist of the Financial Stability Division of the Economics Department of the Bank of Lithuania. According to her, the burden of households was eased by the decline of interbank interest rates, rising (albeit gradually) wages and the fall in the unemployment rate.
The data of the survey show that 11.6 per cent of households in Lithuania have taken housing loans. The majority of respondents indicated the need for own housing as the most important reason for borrowing. Besides, the survey revealed that the growing influence on the decision of residents to borrow is made by the current or expected household income, whereas expectations regarding the growth of real estate prices or advice from outside are increasingly less frequently indicated among the reasons for borrowing.
“People assess their possibilities more rationally. Besides, after the lessons learned during the crisis households are not inclined to assume new obligations. For example, according to the data of the previous year’s survey, 20 per cent of households, in addition to housing loans, also had other financial obligations, whereas this year the share of such households contracted to 2 per cent”, said Ms. Grigaitė.
According to this year’s survey, the average maturity of a household’s housing loan was 25 years, while the average amount of a housing loan made up almost LTL 159,000. The share of income dedicated to the repayment of a housing loan made up 23 per cent of total disposable income of households, i.e. 3.3 percentage points less than a year ago. The average monthly housing loan payment together with interest made up LTL 942, the average interest was 4.4 per cent.
The larger part of households were inclined to borrow in euro by fixing interest rates for a period shorter than one year and selecting annuity-based regular payment calculation method.
The majority of respondents participating in the survey are of the opinion that average housing prices will remain unchanged in the coming twelve months.
The survey was commissioned by the Bank of Lithuania and conducted by Spinter Tyrimai, a public opinion and market research company, in February–March 2012.The number of Lithuanian households with a housing loan from a bank, which were interviewed during the survey, was 1,005.
Comprehensive review of the survey results is available on the website (255.7 KB download icon) of the Bank of Lithuania.