Housing loan activity recovers in Latvia but amounts still lag behind neighbors
Housing lending in Latvia is picking up after a cautious start to the year, with both the number of contracts and average loan amounts increasing, yet still significantly lower than in Estonia and Lithuania.
After a cautious start to the year, housing lending activity in Latvia is recovering. According to Bigbank data, the average mortgage amount in the second quarter reached €69,092, up 15.47% from €59,834 in the first quarter and 7.41% higher compared to the same period last year. The number of signed contracts has also increased, indicating that people are more willing to make long-term decisions regarding home purchases, said Edgars Surgofts, head of Bigbank's Latvian branch.
However, compared to other Baltic states, the average mortgage amount in Latvia remains significantly lower. Bigbank's loan portfolio data for the first quarter shows that in Estonia the average was €131,313—2.2 times higher than in Latvia—while in Lithuania it was €83,936, or about 40% higher. Surgofts explained that these differences largely reflect housing price levels in each country; for example, buying a similar property in Tallinn typically requires larger financing than in Riga.
The latest real estate market data indicates that home prices in Latvia continue to rise. The July 2026 report from "Cenu banka" notes that transaction activity in Riga decreased in April and May compared to March, but prices continued to climb in most categories. Prices for series-built apartments outside the city center and pre-war buildings in central neighborhoods have reached record highs.
As homes become more expensive, banks need to assess not only clients' income but also their overall financial situation, Surgofts emphasized. Employment patterns and income sources are becoming more diverse, requiring a more individualized approach to lending. He advises people to approach multiple banks and compare offers, as interest rates and the way each bank evaluates income and existing liabilities may differ.
To make home purchases more accessible to a wider population, Latvia could consider extending loan terms. Surgofts cited Finland, which introduced up to 40-year mortgage terms from June this year. Such a step could reduce monthly payments for families with stable incomes who are currently hindered by high installments.
Bigbank Group managed a record €3 billion loan portfolio at the end of the second quarter, including €886 million in housing loans. Compared to the previous quarter, the housing loan portfolio grew by €42 million, or 5%.
