However, according to her, commercial banks could already provide their customers with more information on interest rates and create these types of offers.
“These changes will require changes to legal acts and laws, which is why the discussions will have to be transferred to the Seimas. Some technical details that will facilitate implementation will also be discussed. So it is actually about a few months . But nothing prevents commercial banks from formulating proposals and providing more information on interest rates,” Julita Varanauskienė explained to journalists on Tuesday.
The vice president of LB also indicated that such a system would not be a call to consumers to choose or switch to fixed interest rates, but an attempt to create their market, which practically does not exist in Lithuania. At the same time, she said, since most loans are taken out for life, the consumer must have the right to choose.
“This year, only a few percent of housing loans with fixed interest rates have been granted. It’s really not much. There is no indication of the correct ratio as it probably depends on the users. But compare to countries where mortgage markets are mature, have been operating for many years and people have already repaid their loans. “It’s an even larger portion that chooses fixed interest,” she explained.
“A person takes out a loan probably once in their lifetime. We just think it’s right to create more options,” she said.
J. Varanauskienė believes that although such ideas were discussed just before the start of the interest rate hike, this proposal is not late, because there is no bad time to form the interest market fixed.
“If the regulator has not regulated this area before, that is no reason not to do so now.” We also fully understand that these proposals will contribute to consumer awareness and education and that it will take time for people to understand them. (…) We believe there is no bad time to start forming such a market,” she said.
LB proposes to oblige the mortgage lender to offer the consumer at least two alternatives – with a variable interest rate and with at least 5 years. price based on a fixed interest rate or other hedge against fluctuations. The offers would be made after a consumer credit assessment, providing standard information and explaining their content.
It is also proposed to establish a recommendation that the costs of amending an existing credit agreement should not be higher than the costs of entering into a new contract with the same lender.
In addition, it is proposed to oblige credit providers to regularly inform their existing customers about current market mortgage interest rates and refinancing possibilities.
According to LB, in Lithuania, more than 95 percent in a context of low interest rates, all mortgage loans were granted at variable rates. As a result, these loan holders feel the impact of rising base interest rates very quickly and their loan repayments increase. At the same time, most Western European countries are dominated by fixed interest rate loans with durations of more than one year.
Lithuanian banks have so far not been inclined to actively offer loans at fixed interest rates, and the price of an extremely limited amount of loans provided at fixed interest rates in Lithuania is one of the highest in the euro zone.
Furthermore, according to LB, refinancing of housing loans is not common in Lithuania, although it can be useful for consumers. This is especially true for those who entered into contracts between 2018 and 2021, when bank margins were higher, with their loans amounting to 44 percent. of the entire housing loan portfolio.
Source: The Delfi