Gediminas Šimkus, Chairman of the Board of the LB, announced the identification of a new financial risk concerning unsustainable housing prices during a press conference on Tuesday, June 2. Šimkus noted that this particular concern represents a shift from the primary risks identified in the previous year. He stated that the current housing market has shown significant activity, operating approximately 10% above its long-term trend.
This upward momentum is attributed to cheaper borrowing costs and relatively strong housing affordability. Furthermore, he cautioned against assuming that expected future capital injections, such as funds from the second pension phase or amendments to Responsible Lending provisions, will automatically translate into increased housing demand and escalating prices. Supporting the discussion, LB data revealed notable changes in the lending environment.
Specifically, the interest rate for new housing loans has decreased from 5.9% to approximately 3.8%. This decline has correlated with an increase in the number of borrowers securing loans for property purchases. Based on this data, an estimate suggests that around 100,000 housing units were purchased in Vilnius through financing methods.
The confluence of falling interest rates and heightened transaction volume underscores the current dynamics of the housing market. While the increased activity reflects consumer participation, the Board’s focus remains on the potential for price unsustainability, establishing this as the key new risk area for monitoring.
Topics: #market #risk #new
