Over the last year, the total sum of mortgage loans grew 6%, reaching €6.3 billion in June, according to the Bank of Lithuania.
The number of new mortgage deals has been growing steadily since the beginning of the year. In January, Lithuanians took out €69 million in housing loans, while in June new mortgages were worth €107.9 million.
Tomas Garbaravičius, board member at the Bank of Lithuania, explains that mortgage contracts are prone to seasonal fluctuations: banks give away more loans in spring and autumn.
The mortgage portfolio of Lithuanian banks took a downward turn in 2009, in the wake of the global financial crisis, and had been contracting for over five years.
For over a year now, the total worth of the banks' mortgage portfolio has been growing each month, Garbaravičius says.
There are several factors behind higher propensity to borrow to buy property, he explains.
"First, it is greatly helped by people's income growing faster than property prices. Therefore housing affordability is better right now," Garbaravičius says.
Second, interest rates are relatively low, which makes borrowing attractive. On average, mortgage interest rates currently stand below 2%.
"In view of rising income and economic growth, people's expectations are stronger - they have been improving since 2009 and lately people take out more consumer loans as well as mortgages," he says.
With low interest rates, people also see buying properties as a good form of investment. They purchase apartments in Lithuania's bigger cities to let, according to Garbaravičius.
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