Lithuanian commercial banks expected a sharp rise in real estate prices early next year, but now they have reduced expectations. The number of banks expecting real estate prices to increase has halved, while most think that prices will not change.
© Gamintojo nuotr.

The latest survey of commercial banks' lending conditions carried out by the Bank of Lithuania revealed that 65 percent of the polled banks expect property prices to remain at the current level, whereas in April 2014 the figure was at 30 percent. The number of respondents assuming that real estate prices will grow by ten percent in the future dropped by 35 percentage points since April to 25 percent in October.

Nevertheless, banks evaluate real estate property market segments differently. Commercial offices are assessed most positively - 40 percent of respondents believe office prices will grow by up to 10 percent in the next 12 months. Old residential building prices are evaluated more reservedly, a third of the polled predicted they would decrease.

The attitudes of banks towards real estate market prospects are reflected in the changes of mortgage conditions. Although most polled banks have not changed mortgage conditions substantially, yet some of them tightened the terms by increasing the margin for average-risk loans. In addition, some banks assessed expectations related to the general economic situation more reservedly. On the other hand, according to the polled banks, tightening of mortgage loan conditions was limited due to the competition among banks.

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