“A healthy demand is based on generally favourable situation in economics that allows the consumer to be sure of future and provides comparatively low interest rates that foster availability of loans. Without doubt, the support provided by the state within the framework of Altum programme for families with children is one of the key drivers of the availability of mortgages. However, the need for home and actual demand for mortgages is significantly higher, however, part of the society are forced to put off purchase of a home. There are different reasons for that, one of them is insufficient savings for the first instalment,” said the Co-Chairman of the Lending Committee of the ALCB, Head of Mortgage Support Division of Swedbank Ainars Balcers.
“The families’ demand proves that the mortgage guarantees help to solve the topical issue of the first instalment. Guarantee issued by Altum reduces the first instalment payable to the bank on average by 6,700 euros, which is the average amount of guarantee issued until now. This helps families to purchase their home faster, without spending years to save for the first instalment, and therefore the availability of homes to families and children is improved. Moreover, the programme has a positive influence on the lending situation in the country, as each euro invested in the state programme has stimulated 35 times larger attraction of credit resources to the purchase of home,” said the Board Member of the Development Finance Institution Altum Inese Zīle.
Assessing average income, expenses, savings and average amount of transaction of Latvian households, it can be concluded that to save for the first instalment of 20% would require a family almost four years. However, within the framework of the support programme of Altum one year would be enough.
In two years, the Altum programme has helped more than 6,200 families to obtain homes, thereby providing home to more than 9,000 children. The total financing of the household programme reached 10.4 million euros, the amount of issued guarantees amounted to 41 million euros, all in all the amount of mortgages issued along with guarantees was 368 million euros.
Starting 2018, the Altum household guarantee programme will be expanded to retain and attract highly qualified professionals to Latvia. The representative of the Ministry of Economics Baiba Cīrule said that within the framework of the programme support will be provided not only to families and children but also to the young professionals who have acquired vocational or higher education and who are not older than 35. Moreover, support will be provided to all persons who live with at least one child who is up to the age of 24. Currently the support within the programme is provided to families with children who have not reached the age of 18.
“Along with expansion of the home guarantee programme, we will foster availability of homes for families with children and persons with higher or vocational education, thereby motivating highly qualified professionals to stay in Latvia. At the same time the business environment in Latvia will be improved and attraction of young businesspeople and private individuals to economic activities will be fostered, the lending tempo will increase and the amount of investments will be impacted positively,” emphasised Vice Prime Minister, Minister of Economics Arvils Ašeradens.
In 2018, the guarantee programme of homes will be provided financing of 6.6 million euros, within the framework of which guarantees will be issued to families with children and youngsters up to the age of 24. Guaranties will be issued to the young professionals in line with market terms, as a result they will have to pay the annual interest rate for a guarantee and additional financing from state budget will not be necessary. In 2018, Altum is planning to issue about a thousand guarantees in the amount of 6.7 million euros to the young professionals for acquisition of their homes.