“Latio”: Commitments of households to credit institutions exceed value of real estate by 6 billion EUR
Riga, October 8th, 2009
In Latvia, price of dwellings purchased over the last five years exceed their current value by 6 billion EUR.
In Riga, commitments of households for purchase of standard type apartments alone exceed their market value by 1.9 billion EUR.
“Law amendments proposed by the prime minister imposing a ban so that credit institutions would not claim from borrower more than just the pledged real estate is a brave step under present circumstances. In fact, households use one dwelling while pay for three. Such situation paralyses national economy of Latvia. Families have to give away an incommensurably large share of income for service of the liabilities,” says Edgars Šīns, Chairman of the Board of “Latio”.
This problem can be solved at the expense of borrowers, credit institutions or the state. None of the solutions would be easy. Leaving this incommensurable loan to households we risk coming to economic stagnation that could last even for a decade, considers Edgars Šīns.
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