The average interest rates on home loans in the Baltic States stood at 5.12% in the second quarter of 2023, which was 3 percentage points higher than in the same period of 2022, ERR reports. The average rate was the highest in 14 years. The Baltic States have the highest mortgage interest rates in the euro area. Taavi Raudsaar, economist at the Bank of Estonia, said that the main driver of the rise in borrowing costs was the European Central Bank’s monetary policy aimed at curbing inflation. Moreover, the Baltic States have fewer banks, the cost of money is higher for banks, and household incomes are lower than in many western European countries, Raudsaar noted.