Before you decide to buy a home – bankers' advice on what is most important to pay attention to today LRYTAS.LT

With recent buyers returning to the habit of buying a residential home from drawings, banking market experts see potential consumer future financial problems as far less likely compared to the 2008 economic crisis. In addition, savings that have reached record highs during the pandemic in some cases make it possible not to borrow and buy a home for cash.

Julius Ivaška, Director of the Commerce Department of Medicinos Bankas, says that the housing market has been held hostage for several reasons, including the coronavirus pandemic, which has allowed larger personal financial reserves to be built up.

"The pandemic has increased the demand for residential real estate, because in 2020 there was really an unexpected amount of work to do from home, so I wanted to "renovate" the home office, buy a more spacious home or move closer to nature. Even during the pandemic, salaries and bank accounts grew, so it is not surprising that money is diverted to one of the most popular asset classes in Lithuania – residential housing. A much more important question is how healthy and resistant this segment is to so-called bubbles," says Julius Ivaška. According to the Bank of Lithuania, at the end of July, the value of housing loans issued to residents of the country amounted to EUR 9.8 billion. In 2020, when it amounted to EUR 9.1 billion at the end of 2020 and EUR 8.4 billion at the end of 2019. Euro. The initial contribution is that more than a few per cent of the housing market, which boiled over more than ten years ago, has claimed "casualties" in the wake of the crisis. As some home buyers failed to meet their obligations, the homes they bought returned to the banks at the peak. According to J. Ivaška, the bar for granting the loan is currently well raised and allows home buyers to better prepare for a life investment. "In this respect, the situation does not remember 2008 – it is now really more difficult to borrow, because in 2008 it was only 5% of the initial contribution, and now it is required to be 15%. In addition, another indicator is important: a sustainable ratio of at least 40% of loan instalments to sustainable monthly income. Thus, people applying for a home loan are already coming to the bank with a little more experience and knowledge in savings and personal finance management, more objective assessment of their capabilities and a better idea of how long-term financial obligations will have to be fulfilled," notes Julius Ivaška. According to him, respectively, the quality of banks' housing loan portfolio due to the application of responsible lending provisions is currently significantly better than in 2008. Banks lend more cautiously – assess the sustainability and adequacy of customers' income, a smaller proportion of customers have more than one home credit, and the maximum loan term is shortened. "Therefore, it is likely that even if the Lithuanian economy pauses or faces difficulties, the bank's housing loan portfolio would remain sufficiently stable in terms of quality," julius Ivaška predicts. Active Vilnius and cash on the seafront It is in the country's big cities and on the seaside that the purchase of housing from drawings is currently monitored. According to J. Ivaška, this is how buyers rush because of the rising cost – rising costs of materials and raw materials and rising wages of builders to record rising house prices. In turn, shoppers also feel stronger as their salaries rise and expectations are good. "We issue the largest number of loans for house purchase in Vilnius, which accounts for about 40% of the funding provided. Other major cities are active: Šiauliai, Panevėžys, Klaipeda, Kaunas. Although transaction statistics show that there has been a significant increase in the number of REAL transactions in Palanga and Neringa, we do not feel the activity on the seaside or in resort towns. It is likely that often housing is bought here from savings," says J. Ivaška.

According to J. Ivaška, when making a decision on the purchase of real-time housing, it is worth noting that the residential REAL market is currently significantly heating up. "Before deciding to purchase a home, it is necessary to know that if there is not enough own money for such a purchase, the bank will want to see evidence that both the initial contribution has been sufficient and sufficient to meet its obligations. The lessons of 2008 are learned and surely no one wants the script to happen again at that time," says Julius Ivaška, Director of the Commerce Department at Medicinos Bankas.

Source: Before deciding to buy a home – bankers' advice on what is most important to pay attention to today (

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